Supreme Court Refuses Permission to Appeal against Dismissal of Assignment Challenge
On 16 September 2022, in a decision which will be welcomed by insolvency practitioners and litigation purchasers alike, the Supreme Court dismissed (with costs) an application which had been made for permission to appeal the recent Court of Appeal decision in the case of Lock v Stanley, Neutral Citation Number: [2022] EWCA Civ 626.
Background
On 9 May 2022, the Court of Appeal gave a judgment in which it upheld a first instance decision of HHJ Halliwell in which the judge had refused to set aside an assignment of certain claims which had been entered into between the liquidator of Edengate Homes (Butley Hall) Ltd and Manolete Partners plc.
Decision and Reasoning
The Court of Appeal held that the appellant as defendant to Manolete’s claim had no standing to challenge the decision of the liquidator to assign the claims because her interests were not aligned with those of the creditors generally. Mrs Lock’s submission that by assigning the claims to Manolete without first testing the market or giving her the chance to make a competing offer the liquidator had acted perversely was also rejected by the Court of Appeal. Put simply, the effect of the decision was that the liquidator was under no such duty to test the market and the assignment of the claims to Manolete could not be considered perverse.
The appellant applied to the Supreme Court for permission to appeal the decision of the Court of Appeal. That application was lodged in June and the liquidator lodged objections in response to it. The Supreme Court has now refused permission to appeal stating its decision that the application does not raise an arguable point of law which could lead to a successful outcome for the appellant. The Supreme Court concluded that the appellant has no real prospect of success on the issue as to perversity.
Commentary
This decision effectively reinforces the position adopted by the Court of Appeal and insolvency practitioners will take comfort that courts are likely to be reluctant to interfere with the discretion exercised by office holders in making commercial decisions, including the assignment of claims.
Dominic Vincent
ASSOCIATE DIRECTOR, NORTH WEST.