Claims against former joint administrators dismissed on appeal

In August 2013, Barclays appointed administrators over three companies (including Rhino Enterprises Properties Limited) following an unsatisfied demand they had served. The joint administrators investigated possible claims against Barclays including a mis-selling claim, but opted not to pursue those and instead sold some of the company’s properties to pay creditors. They then left office and obtained their releases after the companies successfully implemented CVAs.

The companies later pursued and settled a claim against Barclays, on terms that any claims against the company’s “affiliates” were released. The settlement agreement permitted affiliated to enforce those terms under the Contract (Rights of Third Parties) Act 1999.  Subsequently, the claimants (as contributories) issued proceedings against the joint administrators under Parag. 75 Sch B1 alleging misfeasance for failing to pursue any of the claims against Barclays. A claim was also pursued against the solicitors who, it was alleged, were conflicted. 

The Court of Appeal upheld the first instance decision that these claims were released as part of the settlement agreed with Barclays as the term “affiliates” did in fact cover the joint administrators and the solicitors. Furthermore, it did not matter that the claimants (who were parties to the settlement agreement) had since applied to rectify the terms of it. The joint administrators were entitled to rely on the terms as was, rather than wait until the outcome of the rectification application - it was not contrary to the rule in ex parte James that they stand on their contractual rights.

Schofield v Smith [2022] EWCA Civ 824

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