RAB Capital Plc & Anor v Lehman Brothers International (Europe)

In an unusual administration, claims for the return of assets should ordinarily be appraised and processed by the administrators, as officers of the court, where the underlying rights appear sufficiently clear. The High Court should not generally assume responsibility for determining individual claims at first instance, particularly where granting urgent relief may generate many similar applications and impose an inappropriate burden on the court. Urgent relief may also be refused where the company in administration is probably not the custodian of the assets and effective recovery would require action against an overseas sub-custodian in liquidation.

RAB Capital Plc and RAB Capital Market (Master) Fund applied for an intended application for directions to administrators to be listed urgently for hearing on 26 September 2008. The applicants sought assistance concerning the return of assets which appeared overwhelmingly to belong to them.

The court was informed that the relevant assets were in New York and appeared to be held by an American sub-custodian in liquidation, rather than by the English company in administration. The central issues were whether the proposed application should be heard urgently and whether the court should intervene directly in the administration.

1. Application refused. The intended application for urgent directions was not listed for hearing on 26 September 2008.
2. Administrators are officers of the court. Their function includes appraising claims, dealing with them and giving effect to rights that are clearly established. Where a claim principally concerns the administration of an application for the return of assets, it should ordinarily be processed by the administrators rather than by the High Court.
3. The court should be cautious about granting relief in the first apparently strong individual case where similar claims are likely to follow. The precedent and floodgates consequences may make it inappropriate for the court to assume responsibility for dealing with numerous claims that properly fall to the administrators in the first instance.
4. The compressed timetable was an additional reason for refusing urgent listing. On the information available, the English company was probably not the de facto custodian of the assets. They were held in New York by an American sub-custodian in liquidation, and a request for their return had not succeeded. Even an order against the English company might therefore have failed to secure immediate recovery and could have led to further proceedings under a different legal code.