Curistan v Keenan

Factual and Procedural Background

This judgment concerns ongoing litigation related to Company A, incorporated in 1998 and financed substantially by IBRC. The financing involved debentures and facilities letters primarily for the Odyssey Pavilion project, with debts increasing from approximately 50 million in 2004 to around 80 million by 2009. In June 2010, Company A and other Plaintiffs commenced proceedings against IBRC alleging negligence, breach of contract, fiduciary duty, and misrepresentation arising from the sale of the Odyssey Pavilion and related transactions. IBRC issued a statutory demand against one Plaintiff in August 2010 and appointed Defendant as administrator of Company A in April 2011. The administrator’s appointment was challenged but upheld by the court. The 2010 action remains stayed pending this application.

The present application arises from Plaintiff’s request for assignment of the 2010 action to her personally, which Defendant, as administrator, conditioned on a contingent costs indemnity payment of £250,000. Plaintiff refused and brought this application alleging unfair harm under Schedule B1 of the Insolvency (NI) Order 1989.

Legal Issues Presented

1. Whether the administrator’s refusal to assign the 2010 action to Plaintiff without a £250,000 indemnity payment constitutes acting so as to unfairly harm her interests under paragraph 75 of Schedule B1 of the Insolvency (NI) Order 1989.
2. The scope and meaning of "unfair harm" within the context of an administrator’s statutory duties and powers.
3. The administrator’s discretion in managing litigation and protecting the interests of all creditors during administration.

Arguments of the Parties

Appellant's Arguments

• Plaintiff contends that Defendant’s refusal to assign the 2010 action without a payment (rather than a mere indemnity) unfairly harms her interests contrary to paragraph 75 of Schedule B1.
• She asserts the 2010 action involves substantial claims against IBRC, including alleged overcharging and fraudulent wrongdoing, and that Defendant’s conduct is motivated by improper partisanship aimed at stifling the claim.
• Plaintiff maintains she has a right to acquire the 2010 action by elective assignment under Defendant’s statutory powers as administrator.
• She emphasizes that she would benefit financially more from the assignment than from pursuing her discrete personal claim.

Respondent's Arguments

• Defendant justifies the refusal based on his duty to act in the best interests of all creditors, considering the serious factual disputes and likely protracted, expensive nature of the 2010 action.
• He highlights the absence of assets in Company A and the risk that unsecured creditors, including Plaintiff, would not recover dividends from IBRC’s special liquidation.
• Defendant expresses concern about potential personal or administration expense liability for costs if Plaintiff’s claim were dismissed and she cannot provide security.
• He denies any improper motive or partisanship and asserts the impugned decision reflects a reasonable exercise of discretion.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Curistan v Keenan and Anglo Irish Bank Corporation Limited [2011] NICH 23	Contextual background of the litigation and consideration of Schedule B1 challenges.	Used as a reference for the history of the dispute and interpretation of Schedule B1 provisions.
Marcus Ward Limited v Anglo Irish Bank Corporation Limited [2011] NICH 7	Assessment of genuine and substantial disputes in insolvency litigation.	Referenced regarding injunctions restraining winding up petitions and factual disputes.
Ward v Anglo Irish Bank	Consideration of litigation prospects and costs risks in insolvency proceedings.	Relied upon by Defendant to justify caution and refusal to assign without indemnity.
Re Lehman Brothers International Europe [2008] EWHC 2869	Interpretation of "unfair harm" under Schedule B1 and the administrator’s duty to creditors as a whole.	Supported the principle of even-handed treatment of creditors and the context of administration.
Re Coniston Hotel LLP [2013] EWHC 93 (CH)	Clarification that "unfair harm" involves unjustified differential treatment disadvantaging a creditor or member.	Adopted by the court as the guiding approach for assessing unfair harm claims.

Court's Reasoning and Analysis

The court carefully examined the statutory framework under Schedule B1 of the Insolvency (NI) Order 1989, focusing on paragraph 75 which allows creditors or members to challenge an administrator’s conduct if it unfairly harms their interests. The court emphasized that "unfair harm" requires a tangible detriment that is differential or discriminatory compared to other creditors, not mere harm or disadvantage.

The administrator’s decision to require a £250,000 indemnity before assigning the 2010 action was found to be a reasonable exercise of discretion, grounded in concerns about litigation costs, risks of protracted proceedings, and the absence of company assets. The court rejected Plaintiff’s allegations of partisanship or improper motive, noting no evidential basis for such claims.

Although Plaintiff might suffer some detriment from the non-assignment (extinguishing a potential better financial outcome), this detriment was not unfair harm since it did not amount to unequal or differential treatment relative to other creditors. The administrator’s duty to act in the interests of all creditors as a whole and to treat them fairly was paramount.

The court also noted that Plaintiff retains the ability to pursue her personal claim in the 2010 action, further mitigating any claim of unfair harm.

Holding and Implications

The court DISMISSED the application brought by Plaintiff.

The direct effect is that Defendant’s decision to require a contingent costs indemnity for assignment of the 2010 action stands. Plaintiff will not receive the assignment absent such indemnity. No new precedent was established; the decision reinforces the principle that administrators must balance creditor interests fairly and may exercise discretion to mitigate litigation risks. The ruling confirms that inconvenience or financial disadvantage alone does not constitute unfair harm under Schedule B1 without differential treatment.