Shaw & Anor v Breish & Ors

A receivership order concerns the receivers’ authority to act for a party, not the party’s underlying legal capacity or substantive rights. Where disputes about representation threaten to frustrate enforcement of those rights, the court may confer the authority needed to make the receivership effective. A capacity issue need not ordinarily be determined at an interlocutory or permission stage if the applicant has an arguable or good arguable case. An order extending receivers’ powers should not be backdated without justification, particularly where retrospectivity could affect costs or fetter a later court’s discretion.

The applicants were receivers and managers appointed over rights and potential claims of the Libyan Investment Authority. They sought to amend an earlier receivership order so that they could apply under CPR 31.22 for permission to make collateral use of documents disclosed in earlier litigation.

Teare J had previously held that the receivers lacked power under the original order to make the collateral use application, although he indicated that permission would have been granted if they had possessed that power. The respondents disputed the proposed scope of the amendment, relying on alleged defects in the LIA’s capacity to sue and in the authority of its Chairman to represent it. The issues were whether the amendment should be made and, if so, whether it should have retrospective effect.

1. Amendment granted prospectively. The first receivership order was amended to confer the authority requested by the receivers. The amendment was not backdated.
2. The court distinguished between the LIA’s capacity to sue third parties and the receivers’ authority to act on its behalf. The receivership orders dealt with the latter. They neither conferred on the LIA rights or powers it did not possess nor determined whether the LIA could bring a future claim.
3. It was unnecessary to determine the LIA’s capacity before deciding whether to confer authority for the collateral use application. As in other threshold or permission matters involving substantive rights or locus standi, it was sufficient for the applicant to show an arguable or good arguable case. The capacity issue could therefore be left for the later application.
4. The power to appoint receivers under section 37(1) of the Senior Courts Act 1981 is broad. Its purpose in this case was to prevent disputes over who could instruct or represent the LIA from frustrating enforcement of its rights. The court could therefore authorise the receivers to exercise the LIA’s rights and powers, leaving representation disputes to be resolved later.
5. The alleged lack of authority of the LIA’s Chairman did not justify restricting the receivers’ powers. No extant Board of Directors was said to claim authority to represent the LIA, and unresolved questions of representation reinforced the need for effective receivership. The existing non-ratification provision did not preserve objections to steps taken by the receivers after their appointment.
6. There was no justification for retrospective effect. The absence of authority when the collateral use application was issued did not necessarily prevent the court granting it once authority existed. Backdating could also affect a later costs decision, which should remain unfettered.

The judgment records prior procedural decisions by Teare J concerning the receivers’ power to make the collateral use application, but this was a first-instance application to amend the receivership order. No appellate history is stated.