Manolete Partners PLC v Nigel John Jones & Anor.

The court exercised its case management discretion under CPR 3.1(2)(f) and its inherent jurisdiction (Senior Courts Act 1981 s 49(3)) to refuse a stay of consolidated insolvency and Part 7 proceedings. In applying the overriding objective (CPR 1.1) the judge gave weight to the respondent's delay and conduct, the fact that the respondents had agreed timetabling by consent after issuing the challenge to the administrators, and the risk that any stay would prejudice the applicant and impede an expeditious and fair resolution.

The judge rejected the respondents' submission that a stay was necessary to avoid wasting legal costs because: (i) the respondents had been aware of the claims since 2020 and the alleged grounds to challenge the administrators since 2016; (ii) much of the material was document based and had already been explored in correspondence; and (iii) even if the validity challenge succeeded a court could grant a retrospective administration order (leaving the assignment intact) or the company claims could survive and be pursued by the company, meaning that not all work would be wasted. Consequently the stay application was dismissed.

Background and parties: Traxx (Aggregates) Limited had been placed into administration in October 2016. The applicant, Manolete Partners plc, is an assignee of claims from the joint administrators by agreement dated 26 May 2020. The respondents are the company director (first respondent) and his wife (second respondent). The assignee issued an insolvency application under sections 238–241 IA 1986 and a Part 7 claim; the two proceedings were consolidated.

Relief sought: The respondents sought a stay of the consolidated proceedings pending determination of a separate application (the Validity Application) brought by the first respondent and the company challenging the validity of the out‑of‑court appointment of the joint administrators (alleging no enforcement event under the floating charge).

Issues framed:

• Whether the court should exercise its discretion to stay the consolidated proceedings pending determination of the Validity Application;
• How the overriding objective (CPR 1.1) and case management principles should be applied in the context of alleged prejudice, delay and prior consent directions.

Reasoning: The court considered the claim and defence preparation burdens said to arise for the respondents, the respondents' conduct and delay (the first respondent had raised the issue in 2016 but did not bring it before the court until 2022), and that the respondents had agreed a consent timetable for the consolidated proceedings after issuing the Validity Application. The judge found the respondents' difficulties were overstated and largely self‑imposed; they would not be starting from scratch in preparing a defence because the payments and relevant documents had been explored since 2020. The court also rejected the respondents' assumption that a successful Validity Application would render all work in the consolidated proceedings entirely wasted: a retrospective administration order might be granted (preserving the assignment), or the company claims might survive and could be pursued by the company (with CPR 19.5(3) and Limitation Act 1980 ss 21 and 32 relevant). The potential prejudice to the applicant, delay to resolution and risks to evidence, together with the applicant’s ability to meet any costs order, weighed against a stay.

Conclusion: Balancing the overriding objective considerations (including expeditious and fair resolution, proportionality, and case management), the court dismissed the stay application and ordered that the consolidated proceedings should continue.

The court dismissed the stay application. The judge exercised case management discretion under CPR 3.1(2)(f) and the inherent jurisdiction (Senior Courts Act 1981 s 49(3)), applying the overriding objective (CPR 1.1), and concluded that the respondents had delayed and their difficulties were largely self‑imposed; further, a successful validity challenge would not necessarily render all work in the consolidated proceedings wasted (because a retrospective administration order or continuation of company claims was possible). For these reasons a stay would be contrary to the overriding objective.