BL-2024-000734 - [2025] EWHC 2166 (Ch)

The second ground on which the Defendants seek to strike out the claim and/or obtain reverse summary judgment is that the claim must fail because the Claimants are now estopped from denying that the Defendants were at all times validly appointed and/or have waived or compromised any such argument.

Given my findings as set out above, this point is no longer live. However, since I heard a great deal of argument on it, I set out my findings below in case they may be of use.

On 19 November 2019, the Claimants, Mr Cozens, Ms Fukuda, the Defendants and Golden Phoenix entered into the Waterfall Agreement by way of Deed pertaining to the exit of the Claimants from administration. The recitals to that agreement stated in terms “The Joint Administrators were appointed as joint administrators of each of the Companies on 18 September 2019”. It then set out a detailed procedure for bringing about the Claimants’ exit from administration.

The Waterfall Agreement provided that the Administrators should apply to the court for their remuneration to be fixed under Rule 18.23 of the Insolvency Rules 2016. The Claimant companies provided letters to the Defendants (for the express purpose of being shared with the Court in the remuneration application) which confirmed that the Defendants “were “appointed … as joint administrators of the [Claimants]”, and that they “would not object to the Administrators’ fees and remuneration incurred in relation to the administration”.

ICC Judge Prentis, who determined the application on 6 December 2019, said “plainly, the applicants are within Rule 18.23 of the 2016 Insolvency Rules” – in other words, that they were validly appointed administrators.

It seems to me to be entirely clear that the Claimants would be estopped per rem judicata from denying that they were liable to pay the administrators their costs as awarded by ICC Judge Prentis, and they do not dispute that. The issue, however, is that the Defendants say that by recognising that the administrators are entitled to receive their fees as administrators under Rule 18.23, they have in fact accepted that the administrators are validly appointed as such, and cannot now challenge that appointment.

The Claimants say in response to this that the statement made in the Waterfall Agreement is not that the Defendants were validly appointed, but merely that they were appointed. On its own, this would be a non-point. However, they also point to the fact that there was ongoing correspondence between Mr Cozens and the Defendants which – they say – made clear to them at all times that Mr Cozens did not accept, and intended to challenge, the validity of their appointment. This – they say - undermines any reliance which the Defendants seek to place on the recital in the Waterfall Agreement.

The Claimants also say that they were, in effect, compelled to take the actions that they did. Their point here is that their primary objective was to get Glint released from administration and trading solvently as quickly as possible. Challenging the validity of the appointment of the administrators would potentially have delayed the process – indeed, I do not believe that ICC Judge Prentis would have made the order that he did if he knew that the validity of the administrators’ appointment was in dispute. The Claimants’ position is therefore that they said what they had to say to the court get the administration closed off as quickly as possible, communicating to the administrators all the while that their true position was very different from that which was being presented to the Court.

I think the key point here is as to whether the fact that the Claimants, having presented one position to the court, and obtained a judgment, can now take a different position in different proceedings.

The relevant authorities here are LA Micro Group [2021] EWCA Civ 1429 and Malik v Malik [2024] EWCA Civ 1323.

At paragraph [26] of LA Micro Group, Sir Christopher Floyd stated:

“It is clear, therefore, that this form of estoppel by conduct is one which is approached by means of a broad, merits-based assessment, and is not constrained by strict rules (as, for example, issue estoppel). The matters to consider include, but are not limited to, those enumerated by Ginsburg J in the New Hampshire case. It is material to ask the question whether it is apparent that the earlier decision was obtained on the footing of, or because of, the stance taken by the party in the earlier proceedings. Absent that factor, whilst the change of position may affect the credibility of the party or the witness concerned, there will not be an impression that one or other court was misled into giving its decision, so that the administration of justice risks being brought into disrepute.

The “matters ....... enumerated by Ginsburg J in the New Hampshire case” are (see LA Micro Group at [24]):

“First, a party’s later position must be clearly inconsistent with its earlier position. Secondly, the court may enquire whether the party has succeeded in persuading a court to accept the party’s earlier position, so that judicial acceptance of an inconsistent position in later proceedings would create the perception that either the first or the second court was misled. Thirdly, the court may ask whether the party seeking to assert an inconsistent position would derive an unfair advantage or impose an unfair detriment on the opposing party if not estopped.”

In Malik v Malik [2024] EWCA Civ 1323, Zacaroli LJ adopted the above principles from LA Micro Group and stated at [36]:

“Although Sir Christopher Floyd did not use the phrase, the form of estoppel by conduct in issue can readily be seen as a species of abuse of process.”

That seems to me to be a correct characterisation of the position here. Having supported an application which could only have been made if the Defendants were validly appointed, I think it is an abuse of process for the Claimants now to bring a claim whose fundamental basis is that they were not.

I heard substantial argument on the topic of a number of different types of estoppel, by representation and by conduct. In summary, the arguments put forward were that the fact that the statement concerned was contained in a deed to which the Claimants were parties meant that they could not challenge its accuracy. This is not quite true - as Lord Maugham said in Greer v Kettle [1938] AC 156,

“A party to a deed is not estopped in equity from averring against or offering evidence to controvert a recital therein contrary to the fact, which has been introduced into the deed by mistake of fact, and not through fraud or deception on his part.”

However, there is no such fraud, deception or mutual mistake here. It was also suggested that by reason of their active co-operation with the administrators throughout the period of the administration, the Claimants were estopped by conduct (or possibly by convention) from denying the appointment. I do not think that this is necessarily correct, but the question of its correctness or otherwise does not arise for the purposes of this decision.