Oldham v Kyrris
Oldham v Kyrris | |
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Court | Court of Appeal |
Citation(s) | [2003] EWCA Civ 1506, [2004] BCC 111 |
Keywords | |
Administration |
Oldham v Kyrris [2003] EWCA Civ 1506 is a UK insolvency law case concerning the administration procedure when a company is unable to repay its debts.
Facts
Mr Michael Oldham was appointed by the court as administrator of Mr Jack Kyrris’ partnership. Kyrris had operated 13 Burger King restaurants, including two on Angel Row and Upper Parliament Street, Nottingham. Mr Mario Royle was an employee who sought a secured equitable charge, granted by Kyrris, for work he had done, but had not yet been paid. This amounted to £270,000. A summary judgment was given to Mr Oldham, and Mr Royle cross appealed that Mr Oldham was in breach of a duty of care, and there was sufficient proximity to him were he an unsecured creditor. He said the failure to ensure sums were paid to him was a breach of duty.
Behrens J said the equitable charge point was good enough to go to trial, and gave summary judgment for Oldham on the duty of care point.
Judgment
Jonathan Parker LJ said that any equitable charge was a matter for trial and there was no sufficient proximity between administrators and unsecured creditors. The duty of an administrator is owed to the company, and no special duty was assumed. So under neither of the leading tort cases, Caparo v Dickman nor Henderson v Merrett, would the position differ. This was analogous to the company law case on directors' duties, Peskin v Anderson[1] where Mummery LJ said that fiduciary duties are owed exclusively by directors to the company, and not to shareholders individually. Outside duties can arise, but ‘are dependent on establishing a special factual relationship between the directors and the shareholders in the particular case.’ He also noted Insolvency Act 1986, section 212, allowing the court to compel an administrator to repay money as the court thinks just, or contribute sums to the company’s assets for misfeasance, or beach of fiduciary duty or other duty as the court thinks just.
“ | The alternative claim in negligence
141 In my judgment it matters not whether one adopts the approach of the House of Lords in Caparo Industries plc v Dickman, or the ‘assumption of responsibility’ approach which it adopted in Henderson v Merrett Syndicates: on either approach the result is the same, namely that, absent some special relationship, an administrator appointed under the 1986 Act owes no general common law duty of care to unsecured creditors in relation to his conduct of the administration. 142 In paras 31–34 of his judgment in Peskin v Anderson, Mummery LJ said this:
143 It has not been suggested (nor could it be, in my judgment) that there is any relevant distinction for present purposes between a fiduciary duty and a common law duty of care. Further, I accept Miss Hilliard's submission that the position of an administrator appointed under the 1986 Act vis-à-vis creditors is directly analogous to that of a director vis-à-vis shareholders. 144 Section 8(2) of the 1986 Act defines an administration order as:
145 Section 14(1) of the 1986 Act confers on an administrator a number of specific powers of management set out in Sch. 1, including (in para.14) a power to carry on the business of the company, together with a general power:
146 Given the nature and scope of an administrator's powers and duties, I can for my part see no basis for concluding that an administrator owes a duty of care to creditors in circumstances where a director would not owe such a duty to shareholders. In each case the relevant duties are, absent special circumstances, owed exclusively to the company. 147 It is also material, in my judgment, to consider the nature of the remedy provided by s.212 of the 1986 Act. Section 212(3) provides that on an application under the section the court may compel an administrator (among others):
148 To my mind, this is a further indication that, absent some special relationship of the kind described by Mummery LJ in Peskin v Anderson , an administrator owes no general duty to creditors. 149 My conclusion is also consistent with Romer J's decision in Knowles v Scott [1891] 1 Ch 717 , where he held that a liquidator is not a trustee for the creditors or contributories of a company in liquidation. At p.723 Romer J said this:
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See also
Notes
- ↑ [2001] BCC 874
References
- L Sealy and S Worthington, Cases and Materials in Company Law (8th edn OUP 2007) 635
- R Goode, Principles of Corporate Insolvency Law (4th edn Sweet & Maxwell 2011)