Candey Ltd v Crumpler & Anor (Liquidators of Peak Hotels & Resorts Ltd)

A foreign liquidator recognised under the Cross-Border Insolvency Regulations 2006 remains a foreign representative. Recognition does not convert the foreign liquidation into a winding-up under Parts IV or V of the Insolvency Act 1986, nor does it make the liquidator a British insolvency office-holder. The saving provision in article 4(c) of the LASPO Order therefore does not permit recovery of a CFA success fee in proceedings brought by such a liquidator.

A solicitor waives a statutory or equitable lien by taking inconsistent security without reserving the lien. An express or implied reservation may prevent waiver, but the security and retainer must be considered objectively as one transaction. A solicitor’s instrumentality is broadly construed: prior work may be causative of property obtained through a later settlement, applying a but-for test.

Candey acted for Peak Hotels & Resorts Ltd in extensive litigation. The company entered liquidation in the British Virgin Islands, and its liquidators obtained recognition of that foreign proceeding in England under the Cross-Border Insolvency Regulations 2006.

The liquidators later applied for directions concerning Candey’s security under a fixed fee agreement and deed of charge. Candey also sought a charging order under section 73 of the Solicitors Act 1974, asserting a solicitor’s lien over settlement proceeds and other funds. The court had to determine whether the liquidators’ application fell within the success-fee exemption and whether Candey had retained or waived its lien.

1. Exemption issue. The liquidators’ application was not proceedings within article 4(c) of the LASPO Order. Recognition under the CBIR gave the liquidators access to specified relief and powers, but did not change the status of the liquidation or make them British insolvency office-holders. The distinction between status and relief was fundamental. The application therefore did not qualify for the exemption, and the issue was decided for the liquidators.
2. Pre-liquidation waiver. A solicitor’s equitable lien and section 73 right may be waived by taking inconsistent security without reserving those rights. The relevant documents were the fixed fee agreement, incorporated terms and deed of charge, read together. Although the contractual interest provision was part of the retainer and was not itself inconsistent with the lien, the charge covered the same assets and Candey sought to assert the two securities at different levels in the insolvency priority waterfall. Those rights could not sensibly subsist in parallel. The terms concerning retention of papers and application of monies did not expressly or impliedly reserve the equitable or statutory lien. The lien was therefore waived before liquidation.
3. Reviver and post-liquidation waiver. The deed of charge remained valid as a floating charge. Its lesser effectiveness did not revive the waived lien. Had the lien survived, lodging a proof of debt without mentioning it would not, in the ordinary circumstances, have waived it. A solicitor is not generally required to identify the lien in a proof of debt, and the case was materially different from Re Safety Explosives Ltd [1904] 1 Ch 226.
4. Instrumentality and abuse of process. The court stated, in the alternative, that instrumentality is broadly construed and includes property obtained through a settlement where the solicitor’s prior work materially contributed to the negotiating position. Candey’s work was instrumental in relation to both the settlement proceeds and the SCB monies. Reliance on the lien at that stage would not have been an abuse of process, although earlier assertion would have saved substantial costs.
5. The Exemption Issue was decided in favour of the liquidators and the Lien Application was dismissed.

The judgment records earlier first-instance and appellate decisions in the same litigation, including decisions on the character of Candey’s security and the value of its services. Those decisions were procedural stages of the same dispute and are not separately treated as cited authorities.