Wentworth Sons Sub-Debt SARL v Lomas & Ors

The court may direct separate trials of issues, but preliminary issues should be ordered cautiously and sparingly. The criteria in Steele v Steele provide guidance, not rigid rules. Early determination may be appropriate where an issue could dispose of the case or materially reduce cost, delay or uncertainty. The court ordered preliminary determination of issues concerning a claims determination deed, but deferred decision on limitation issues pending further evidence and clarification of a proposed joinder.

Wentworth challenged the admission of Olivant’s proof of debt in the administration of Lehman Brothers International (Europe). The proof had been admitted for an agreed amount under a claims determination deed. Wentworth relied on rule 14.8(3) of the Insolvency Rules 2016.

The administrators proposed five preliminary issues. Three concerned the effect of the deed and the court’s powers on the challenge. Two concerned the 21-day time limit. The court also considered a late joinder application. The substantive challenge was not decided.

1. Under CPR r.3.1(i), the court may direct a separate trial of any issue. The power must be exercised with caution and sparingly because preliminary issues may cause duplication, delay, expense and appeals.

2. The ten criteria summarised from Steele v Steele are useful guidance but are not inflexible rules. They include dispositive potential, likely savings, the factual basis, risks of fettering or duplication, delay, irrelevance, amendment and overall justice.

3. The effect of the Olivant claims determination deed, and whether it prevented relief under rule 14.8(3), was potentially decisive and capable of determination on a short, substantially agreed factual basis. Issues concerning the court’s approach and available relief could usefully be determined with it. Issues 3 to 5 were therefore directed to be heard as preliminary issues.

4. The timing issues involved unresolved factual questions concerning awareness, attribution of knowledge and computation of the 21-day period. Their immediate determination would have been premature. Final decision on Issues 1 and 2 was deferred pending further evidence and clarification of the proposed joinder.

5. A four-day hearing window was to be reserved before October 2018. No substantive determination of Wentworth’s challenge was made.