Mond v Hyde

An official receiver is absolutely immune from suit for statements made in the course of bankruptcy proceedings and within the scope of statutory powers and duties. The protection includes information supplied to a trustee under rule 351(4) of the Bankruptcy Rules 1952, even where the statement was not made at a formal hearing. The immunity is founded on the need for frank participation in the administration of justice and applies regardless of whether the claim is framed in defamation or negligence. A department is not generally vicariously liable for an official receiver’s statements merely because it appoints and directs the receiver. A trustee’s decision to disclaim a speculative claim where the estate has no assets is within the proper range of discretion. Positive and unqualified statements, reliance and causation would nevertheless have been triable issues absent immunity.

Mond, appointed trustee in bankruptcy, relied on statements by an assistant official receiver concerning whether the bankrupt’s claim against third parties remained an asset of the estate. The bankrupt subsequently obtained a declaration that the claim had been disclaimed, leaving Mond personally liable for substantial costs incurred in defending the proceedings. Mond sued the official receiver and the Department of Trade and Industry in negligence, both personally and on behalf of the estate.

The Vice-Chancellor struck out both claims. The appeal concerned witness and public-policy immunity, duty of care, pleading, reliance and causation, waiver, the Department’s alleged vicarious liability, the need for bankruptcy-court consent, and the propriety of the official receiver’s decision to disclaim the claim.

Lord Justice Beldam delivered the judgment, with Lord Justices Aldous and Ward agreeing. The appeal was dismissed with costs.

1. Negligent misstatement and causation. The statements were capable of conveying positive and unqualified assertions that no waiver had occurred. They were intended to be relied upon by the incoming trustee. The pleading should not have been struck out for inadequate particulars without giving an opportunity to amend. Reliance on the statement could remain an effective cause of loss even though Mond also exercised his own judgment. The approach to concurrent causes in Leyland Shipping Co. v Norwich Union Fire Insurance Society [1918] AC 350 supported allowing those issues to be proved.
2. Absolute immunity. The common-law rule protects judges, counsel, parties and witnesses from claims arising from statements made in judicial proceedings. It extends to statements made in preparation for proceedings and to authorised inquiries possessing judicial characteristics, as explained in Munster v Lamb [1883] 11 QBD 588, Watson v M’Ewan [1905] AC 480, Royal Aquarium and Summer and Winter Garden Society v Parkinson [1892] 1 QB 431 and Burr v Smith & Ors [1909] 2 KB 306.
3. The official receiver is an officer of the court with extensive statutory duties. Reports and information supplied in the course and for the purpose of bankruptcy proceedings require frankness and are subject to court control. Statements made under rule 351(4) of the Bankruptcy Rules 1952, concerning the getting in of estate assets, therefore attracted absolute immunity. The protection could not be avoided by pleading negligence rather than defamation. The caution in Waple v Surrey County Council [1998] 1 WLR 860 and the public-policy analysis in Spring v Guardian Assurance plc [1995] 2 AC 296 did not justify denying the immunity.
4. Departmental liability. The relationship between the Department and the official receiver was not one of master and servant. The statutory scheme did not make the Department vicariously liable for statements made by the receiver in performing his duties. Authorising the trustee’s defence through powers otherwise exercisable by a committee of inspection did not alter that conclusion.
5. Other issues. A waiver required a clear and unequivocal statement intended to absolve the other party from liability; Mond’s letter did not have that effect. The official receiver’s decision to disclaim the speculative claim, when the estate had no assets to fund proceedings, was within his discretion and was not negligent merely because the claim later proved valid. The question whether leave was required to commence the proceedings was expressly left undecided.

• Court of Appeal (Civil Division): on appeal from the High Court, the appeal against the Vice-Chancellor’s strike-out order was dismissed with costs; leave to appeal to the House of Lords was refused. [1998] EWCA Civ 1226