Friday, 2 October 2009

IPs under examination and s.1157 CA06 considered - Rawnsley & Anor v Weatherall Green & Smith North Ltd [2009] EWHC B22 (Ch)

His Honour Judge John Behrens (no doubt in his new post Phillips' reforms outfit - see right) has handed down his judgment in Rawnsley & Anor v Weatherall Green & Smith North Ltd [2009] EWHC B22 (Ch). The case involved, inter alia, an insolvency practitioner (IP - Mr O'Hara) who allegedly failed to institute proceedings for negligence against Weatherall Green & Smith North Limited, who had, it was alleged, given negligent valuation advice to Mr O'Hara in relation to property of the Canal Dyeing Company Limited (the insolvent company). The property was the Old Lane Dyeworks, Old Lane, Halifax ("the property"). It was alleged that because of the advice, "Mr O'Hara failed to market the property properly with the result that the sale was for less than the price that ought to have been achieved." The case highlights a number of criticisms of Mr O'Hara. These included:
The company had a joint liquidator (Mr Poxon). In his report he noted:
"In conclusion, although I believe Mr O'Hara's management of the case could have been handled more effectively, he did rely on the advice of his agents to provide a professional valuation and therefore an indication of the likely realisable value. As an offer was received by Mr O'Hara far in excess of the market value provided by Weatheralls it can be argued that Mr O'Hara acted in the best interests of creditors by not only accepting the offer but ensuring that costs were kept to a minimum. In contrast I have been advised by independent agents that Weatheralls conducted insufficient enquiries with the local authority given their expertise and experience and therefore did not provide the liquidator with a clear of the potential value of the land and buildings. In my opinion there are reasonable grounds against the liquidator's agent for negligence in providing substandard advice …"

In relation to section 1157 of the Companies Act 2006 the learned judge noted:
"Mr Mitchell also suggested that Mr O'Hara would obtain relief under section 1157 of the Companies Act 2006. I cannot accept this argument either. It is to my mind seriously arguable that a liquidator is not within the ambit of section 1157. Even if he is the question of whether he should obtain relief is plainly fact sensitive and should be determined at a trial. In any event Mr O'Hara was a professional liquidator who was earning substantial fees from the liquidation. He chose to ignore advice from Weatheralls, not to follow up the insurance correspondence and (on one view) to lie to HSBC over the extent of the marketing that he was carrying out. In those circumstances I would have thought he might well have an uphill task in seeking to persuade any court to grant him relief under section 1157."
Picture Credit: http://image.guardian.co.uk/sys-images/Arts/Arts_/site_furniture/2007/05/01/courtroomdress460.jpg

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