[2025] EWHC 2316 (Ch)

DO THE LOES AND TERMS HAVE EFFECT AFTER THE APPOINTMENT OF THE LIQUIDATORS?

The fact that I have found that the provisions in the LoEs (taken with the Terms) cannot and do not affect liability of the Former Liquidators deals with only part of the Preliminary Issue that I am required to answer. The Former Liquidators are the Fourth and Fifth Defendants. It remains possible, despite that finding, that these provisions may limit the liability of the other Begbies Defendants both before the appointment of the Former Liquidators as liquidators and after that appointment.

That an officeholder’s firm may, separately from the officeholder themselves, owe duties on a contractual or tortious basis was accepted by Jacob J in A & J Fabrications (Batley) Ltd v Grant Thornton [1999] BCC 807, at 810 where he said:

“It is true that it is employees of the firm who were the liquidators, but they only took their position as such by virtue of the contract between the plaintiff and Grant Thornton. Grant Thornton, in accepting the consideration of £5,000, were contracting to put their man in as liquidator. Of course once in as liquidator he would owe his duties to the company. But there is nothing inconsistent between the pleaded contract and the employee having duties to the company. The pleaded contract is, in short, that the employee/liquidator undertakes to do a proper job as liquidator. That is what Grant Thornton contracted would happen.”

The Claimants maintain (I have found correctly) that a liability cap could not apply to claims against the Former Liquidators. They argue also that a liability cap cannot apply to any vicarious liability for the conduct of the Former Liquidators on the part of Begbies LLP and/or BTG Advisory. However, they acknowledge that insofar as Begbies LLP and BTG Advisory are themselves separately liable to the Claimant Companies for their own breaches of contract (including by reason of the conduct of the Former Liquidators), it is possible that a liability cap could apply to those claims.

However, whilst the Claimants acknowledge this last point in theory, they argue that on their proper construction, the LoEs and Terms do not limit the liability of any of the Begbies Defendants as regards anything done within the liquidation. This is the point that I consider next.