News Publication Date: 29 January 2014
IN THE HIGH COURT OF JUSTICE OF THE ISLE OF MAN
CIVIL DIVISION
CHANCERY PROCEDURE
Between:
Helen Bernadette Malone Claimant
And
Craig Mitchell (as liquidator of Prophecy Pension Trustees Ltd) Defendant
IN THE MATTER of the Claim Form dated 1st November 2013
CHP 13/0151
Between:
Craig Mitchell (as liquidator of Prophecy Pension Trustees Ltd) Claimant
And
Helen Bernadette Malone Defendant
IN THE MATTER of the Claim Form dated 12 November 2013
Judgment Summary issued by the High Court of Justice of the Isle of
Man
This summary is provided to assist in understanding the judgment of the court. It does not form part of the judgment. The judgment itself is the only authoritative document. The full judgment is available at www.judgments.im.
On 27 January 2014 His Honour Deemster Doyle First Deemster and Clerk of the Rolls sitting in the High Court of Justice of the Isle of Man Civil Division Chancery Procedure delivered a judgment which concerned the position of conflict liquidators in Manx law.
The problem was identified as follows: A liquidator is appointed over two companies. One company wishes to lodge a proof of debt against the other.
There is an obvious conflict. What is the solution? There is English authority to the effect that another individual (known as a conflict liquidator) from the
liquidator’s own firm can be appointed to deal with the proof of debt unless there are any particular reasons for rejecting that course.
In the absence of any local Manx authority on the point the First Deemster applied Newey J’s decision in Re York Gas Ltd [2010] EWHC 2275 (Ch) which held, following earlier English authority, that as a matter of principle a conflict of interest faced by a liquidator can be effectively managed by the appointment of another member of the liquidator’s firm to deal with such issue. Newey J ( a former Deemster on the Isle of Man and now an English High Court judge) applied that general principle and asked himself the important question are there 'any particular reasons for rejecting that course here?' In the circumstances of the case before the court in the Isle of Man, the First Deemster concluded that there were particular reasons for rejecting that course of action in the present case and declined to appoint a conflict liquidator from within the same company as the liquidator.
Deemster Doyle concluded as follows:
'80. I accept on the basis of Re York Gas that the appointment of an additional office-holder as conflict liquidator from the same firm or company as the liquidator can, in principle, sometimes provide a cost effective and efficient solution to a conflict in respect of the determination of a proof of debt. I have also considered Newey J’s question are there “particular reasons for rejecting that course here?.
'I have concluded that there are particular reasons for rejecting that course here and I have set those reasons out in this judgment. I exercise my discretion in the particular circumstances of this case by declining to appoint Mr Craine as conflict liquidator and by appointing Mrs Slee as conflict liquidator to determine the proof of debt issue.'