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In the matter of Fraser Turner Ltd v Pricewaterhousecoopers LLP & Ors [2019] EWCA Civ 1290 which can be read here the Court held that the general body of creditors comes first, even conceivably at the expense of an individual creditor if the officeholder is undertaking his or her duty whilst acting in good faith.

The judge was, therefore, right to hold that the Administrators owed FT no duty of the kind alleged by FT. On the evidence of Mr Turner, no special relationship was created between the Administrators and FT, and no special circumstances have been shown to exist such that a duty was created. The Administrators had no duty to protect FT as a single creditor of London Mining and LMCL against losses caused by the failure to procure Timis Mining either to pay the Royalty or to enter into any kind of accession deed.Paragraph 74 provides as follows:-In Four Private Investment Funds supra at paragraph 39, Blackburne J made it clear that there could be no unfairness sufficient to engage paragraph 74 without a suggestion that the administrators were acting otherwise than in accordance with their obligations under Schedule B1 of the Insolvency Act 1986 or an order of the court. There, as here, the Administrators were, as it seems to me, seeking in good faith to carry out their functions in the interests of the creditors as a whole. Accordingly, the judge was right here too to hold that any harm that might have been caused to FT by selling the mine without procuring Timis Mining to pay the Royalty could not have been caused “unfairly” within the meaning of paragraph 74. Moreover, FT is not really complaining that it suffered harm in its capacity as a creditor of London Mining. That is a necessary requirement for a claim to be brought under paragraph 74: see e.g. Re Coniston Hotel (Kent) LLP [2015] BCC 1 at [36]. In this case, FT was admitted to proof in the administration of London Mining for its claim to future payments of Royalty, and it received a dividend together with other creditors. FT’s substantive complaint is that the Administrators did not assist it, in its private capacity, to obtain a new royalty contract with Timis Mining. That would, had it been achieved, have given FT a benefit not available to other creditors of London Mining, and might have resulted in a lower price being realised from the sale of the mine, to the detriment of creditors generally.

Elliot Green

Licensed Insolvency Practitioner & Chartered Accountant. We Know Insolvency Inside Out.

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