Goel and another v Grant and others (Re Meem SL Ltd (in administration))

The court dismissed the applicants' application to restrain the administrators from selling a company cause of action by auction. The judge held there was no concluded contract of assignment by offer and acceptance in the email correspondence: the negotiations were objectively to be treated as subject to contract and involved the contemplated involvement of solicitors and formal documentation. Further, the applicants failed to establish that disposal by auction would unfairly harm their interests under paragraph 74 of Schedule B1 to the Insolvency Act 1986. The court emphasised the wide commercial discretion afforded to administrators in disposing of assets and the high threshold required for intervention, particularly where a sale by auction produces certainty and speed.

The applicants, majority shareholders in Meem SL Limited, sought to restrain the joint administrators from auctioning the company's alleged claim against the second respondent and others for conspiracy and related wrongs. Two principal grounds were advanced: (i) that an assignment of the company's claim to the applicants had been contractually agreed by email and (ii) alternatively that the administrators' proposal to sell the claim by auction would unfairly harm the applicants' interests under paragraph 74 of Schedule B1 to the Insolvency Act 1986.

The court examined the email exchanges between the applicants' solicitors and one of the administrators. Applying objective principles of contract formation, and authorities on correspondence and dealings where solicitors are to be involved, the judge concluded the exchanges were exploratory and impliedly "subject to contract"; no offer capable of acceptance arose and the parties intended formal documentation and solicitor involvement. Even if an agreement had been found to exist, the judge observed that allowing one creditor to buy the company's only remaining asset at an undervalue would be objectionable.

On the paragraph 74 point the court analysed authorities concerning administrators' powers, the standard for court intervention (which is high, approaching perversity or irrationality), and the particular difficulties of valuing causes of action. The judge accepted that causes of action are often hard to value and that a sale by auction can be a reasonable method of realisation. Applying these principles to the evidence, the judge found the applicants had not shown that an assignment to them would provide sufficient certainty of funding, success or recovery, nor that auction would produce unfair harm; moreover the evidence did not establish that the claim could not be tested by competitive bidding. The application was therefore dismissed.

• Nature of the application: substantive injunction/restraint to prevent administrators selling a company cause of action (the Claim) and declaration of an existing contract of assignment.
• Issues framed: (i) whether a binding contract of assignment existed by email; (ii) whether disposal by auction would unfairly harm the applicants under paragraph 74 Schedule B1.
• Court's reasoning: objective construction of correspondence; solicitors' involvement implied "subject to contract"; administrators have a wide commercial discretion and only a high threshold justifies intervention under paragraph 74; auction was commercially justifiable and applicants did not prove unfair harm.

Application dismissed. The court held there was no binding contract of assignment because the email negotiations were exploratory and impliedly subject to contract with formal documentation to follow. On the statutory ground under paragraph 74 of Schedule B1 to the Insolvency Act 1986, the applicants failed to show that disposing of the claim by auction would unfairly harm their interests: administrators have a wide commercial discretion to realise assets, a high threshold applies before the court will intervene, and the evidence did not establish unfairness or perversity in the proposed auction.