Administrator avoids personal liability for costs of successful appeal against rejection of proofs of debt

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The Applicants sought an order that the Administrator (“Mr Patel”) be held personally liable for the costs of a partly successful challenge to his rejection of proofs of debt.

The starting point was therefore that Mr Patel was not personally liable. The court had to consider whether his conduct warranted a departure from that position.

The Applicants made a number of allegations relating to Mr Patel’s conduct, including that he reached conclusions that documents were forged without proper evidence, and actively came up with false theories to suggest that the proofs of debt were not genuine and asked leading questions to interviewees to support those theories.

Chief ICC Judge Briggs confirmed that the Administrators’ conduct, including his notice of rejection and the reasons he had given for rejection, had to be considered holistically.

There had been a clear conflict of evidence between the Company’s director and the creditor Applicants. Mr Patel had to make a choice in light of conflicting evidence. He was justified in seeking clarification, requiring a paper trail, checking the accounts of the proving creditor to understand which company had made the relevant supply, if they supplied at all, probing the creditor on specific issues, asking the director of the Company and analysing the best he could the Company records. This represents reasonable and expected behaviour of a competent office holder. 

Further, he had been entitled to rely upon the statutory books and records of the Company, which had contradicted the creditors’ evidence. 

ICCJ Briggs rejected the Applicants’ assertions and concluded that, having acted in the context of a highly contentious dispute (which had originally arisen from an unfair prejudice petition), Mr Patel had acted appropriately and with integrity. The costs should be borne by the insolvent company in the usual way.

Nimat Halal Food Ltd (2) Nimat Halal Meat Ltd v (1) Nimish Patel (As Administrator of Tariq Halal Meat (Ilford) Ltd) (2) Tariq Sheikh [2020] EWHC 734 (Ch)

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