Banks granted permission to sue valuers

Posted: 9th November 2012

A court ruling has clarified the extent of judicial power to grant permission for legal proceedings to be launched retrospectively against companies in administration. A judge exercised his discretion under paragraph 43(6) of schedule B of the Insolvency Act 1986 to enable banks to sue a company specialising in property valuations for alleged negligence.House

The governors and company of the Bank of Ireland and its wholly owned English subsidiary, Bank of Ireland (UK) Plc. (the banks), lost substantial sums when the Southern Cross Group of companies, which had operated numerous care homes, went into administration. Property valuation surveyors, Colliers International UK Plc. (the company), had prepared valuations of those care homes.

The company went into administration in March 2012 and the banks subsequently gave notice of their intent to launch legal proceedings to the administrators who made no objection to the institution of such proceedings and did not oppose the banks’ application to the court for permission to take that step.

Mr Justice David Richards ruled that the court did have jurisdiction under paragraph 43(6) to grant such permission and that it was a ‘clear case’ for doing so. However, permission was only granted on terms that any judgment which may be obtained against the company cannot be enforced without leave of the court.