Administrator appointed under statutory power - general common law duty of care not owed to creditors

Kyrris & Anor v Oldham & Ors: CA (Lords Justice Thorpe, Jonathan Parker and Dyson): 4 November 2003

A creditor brought a claim in negligence against the administrators of a partnership, which was in administration.

The claim, which was one of a number of actions brought by various parties, was founded on a submission that administrators could owe a general tortious duty of care to individual creditors, with the effect that creditors would be entitled to sue for breach of duty.

The judge who heard the claim (sitting in the Chancery Division in Leeds) rejected the submission before striking out the claim.

The creditor appealed against the decision.

John Haines (instructed by Irwin Mitchell, Sheffield) for the claimants; Lexa Hilliard (instructed by Lawrence Graham) for the administrators.

Held, dismissing the appeal, that there was no relevant distinction for these purposes between a fiduciary duty of the kind discussed in Peskin v Adamson [2001] 1 BCLC 372 and a common law duty of care; that the position of an administrator appointed under the Insolvency Act 1986 vis--vis creditors was directly analogous to that of a director vis--vis shareholders; that to the extent that A & J Fabrications Ltd v Grant Thornton [1998] 2 BCLC 227 left open the question whether a liquidator might owe a general tortious duty of care to creditors, Peskin v Adamson decided the matter; that, therefore, absent some special relationship of the kind there described, an administrator did not owe a general duty to creditors; and that, accordingly, the judge had been entitled to strike out the creditor's claim.