Permission to appeal hearing (Promontoria (Chestnut) Limited v Craig and anor)

Permission to appeal hearing (Promontoria (Chestnut) Limited v Craig and anor)

Kirsten Fleming of Addleshaw Goddard examines the administrator’s application for permission to appeal the earlier judgment. Permission was refused by the Court of Appeal who will not generally interfere with the discretion of the judge of a lower court. In this case the Court of Appeal reaffirmed the balancing act set out in Re Atlantic Computers. For analysis of the judgement of the High Court, click here.

Promontoria (Chestnut) Limited v Craig and anor [2017] EWHC 2405 (Ch)

What are the practical implications of this case?

Practitioners should note that the Court of Appeal will not generally interfere with the exercise of discretion by a judge of the lower court, having examined in judgment all of the available evidence. The decision of the Court of Appeal effectively reaffirmed the correct approach of the judge in the lower court of carrying out a balancing act per Re Atlantic Computers [1992] Ch 505, [1992] 1 All ER 476.

What was the background?

The judgment in Promontoria (Chestnut) Ltd v Craig and another [2017] EWHC 2405 (Ch) in October 2017 found against the administrators in seeking control of certain secured assets, and underlined the importance of consulting with secured creditors and the need to obtain reliable evidence of the value of the security assets in assessing whether control of the assets is necessary to achieve the purpose of the administration. For full details see news analysis: Administrators’ decision to remove receivers was unreasonable (Promontoria (Chestnut) Ltd v Craig and another)

The administrators sought to appeal this decision on the grounds that:

  1. the judge failed to take into account ‘the overwhelming evidence’ in favour of the administrators, and instead attached insufficient weight to the Respondent's valuation evidence in respect of the properties subject to the legal charges
  2. the judge failed to take into account the ‘procedural irregularities’ allegedly committed by the respondent
  3. the judge wrongly found against the administrators as they were acting within their powers
  4. instead of ordering the administrators to bear the costs of the respondent's application personally, the judge ought to have allowed these to be treated as an expense in the administration as they had acted in the best interests of all the creditors and not in an improper manner

What did the court decide?

The Court of Appeal refused the administrators' appeal, on the basis that the judge did not interfere with the administrators' decision, but instead considered whether the respondent should be permitted to enforce its security. He therefore correctly directed himself in accordance with Re Atlantic Computers.

On the question of costs, the judge recognised the default rule but considered that there was good reason to depart from it in view of the administrators' actions.

Case details

Court: Court of Appeal

Judge: Right Honourable Lord Justice Lewison

Date of judgment: 5 January 2018

Kirsten Fleming specialises in corporate restructurings and insolvency but also has experience of personal insolvencies and debt recovery using Scottish and English procedures.

The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.

Further Reading

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Out-of-court appointments—who can apply and in what circumstances?

Lifting the administration moratorium—appointment of fixed charge receiver

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About the author:

Anna joined the Restructuring and Insolvency team at Lexis®PSL in August 2013 from Berwin Leighton Paisner where she was a senior associate in the Restructuring Team.

Anna has worked on a number of large scale restructurings primarily in the UK market acting on behalf of lending institutions.

Recent transactions include the restructuring of a UK hotel chain and the administration sale of part of the Connaught group. Anna has also spent time on secondment at The Royal Bank of Scotland and trained at Clifford Chance qualifying in 2007.