In the Matter of Lehman Brothers International (Europe) (In Administration) (2011)


An application by administrators for directions to enable them to identify client money and its traceable proceeds received or held by a company which was in administration was adjourned as it was appropriate to await the outcome of a pending appeal to the Supreme Court on related matters.


The administrators (S) of a company (L) applied for directions to enable them to identify client money and its traceable proceeds received or held by L. Directions given in a previous application (case one), had been varied by the Court of Appeal. There was a pending appeal against that decision to the Supreme Court. S sought directions for further work to be carried out, for evidence to be prepared for a hearing to identify appropriate respondents, and to make protective costs orders in favour of S. It was estimated by S that the further work would take about three months to complete at a cost of between £5 to £10 million. Some potential respondents (X) opposed the making of the directions. X submitted that an application before the Supreme Court's determination in case one was premature; to authorise the carrying out of any further work could lead to unwanted costs; a protective costs order was unnecessary and inappropriate.


While the court sympathised with S's desire to do everything reasonably possible to progress a complex and drawn-out administration rather than to allow legal uncertainties to cause further delay, and while respect was to be accorded to their views, the balance was against authorising further work, or preparing evidence based upon it. Although a delay might be avoided if S's proposals were accepted, the court was not confident that it could properly identify suitable respondents or give all the management directions for the instant case before the decision of the Supreme Court, even if the further work was done and the evidence was prepared and filed. It was essential for the outstanding issues raised in case one to be determined before the court committed both S and the respondents to the substantial further work and expense necessary for the preparation of the instant hearing. Even if further work was done and the evidence filed, it would save only about three months. It would not be appropriate to authorise the incurring of further expenditure of up to £10 million for the achievement of an uncertain objective. Any further hearing before the Supreme Court's decision would be premature. It would be appropriate to adjourn the application to await the outcome of the Supreme Court decision and to make no protective costs order in the meantime (see paras. 13,15,22).

Judgment accordingly