Factual and Procedural Background
Company A, Company B, and Company C were a start-up group built around an app linked to the price of gold; Company B was an authorised electronic money institution and Company C owned specialist technology used in the business, and the group was treated as solvent before the loan was accelerated. [Para 32][Para 33]
On 22 January 2019, Company A obtained a secured loan from Company D, with Company B and Company C guaranteeing the debt and granting fixed and floating charges under a debenture over broadly defined secured assets. [Para 35][Para 36][Para 37] Company E later sought to acquire Company A, was assigned the loan and debenture, made information requests on 15 July 2019, treated non-response as an event of default, appointed the Respondents as administrators on 18 September 2019, and after Company A refinanced and repaid the loan the parties entered into a waterfall agreement and remuneration letters before the administrators were remunerated and discharged. [Para 38][Para 39][Para 41][Para 48][Para 51][Para 52][Para 54][Para 55][Para 56][Para 58][Para 60][Para 62][Para 63][Para 65]
Several years later, Company A sued the Respondents for equitable compensation or damages for trespass on the basis that the administrators had never been validly appointed, and the High Court judge struck out the claim. [Para 67][Para 72][Para 73][Para 74]
Legal Issues Presented
- Whether the 15 July 2019 information requests fell within section 1.11.1 of the debenture and, if so, whether non-response was an event of default under the loan. [Para 48][Para 49][Para 50][Para 76][Para 77][Para 134]
- Whether an out-of-court appointment of administrators is ineffective where the appointor’s sole purpose was alleged to be improper, namely acquiring the company’s business and assets rather than pursuing a proper insolvency purpose. [Para 68][Para 69][Para 70][Para 71][Para 137][Para 183]
- Whether estoppel by conduct, estoppel by convention, estoppel by deed, or estoppel by representation, or abuse of process, barred Company A’s invalid-appointment claim because of the waterfall agreement and remuneration letters. [Para 97][Para 98][Para 99][Para 100][Para 101][Para 102][Para 197][Para 198][Para 202][Para 219][Para 228]
Arguments of the Parties
Appellants' Arguments
- Section 1.11.1 should be read narrowly, so that it applied only to tangible assets or, at most, assets with a location, condition, use, and operation; on that view, the 15 July Requests were outside the clause. [Para 92][Para 93][Para 106][Para 110][Para 112][Para 113]
- The appointment of the Respondents was invalid because Company E’s real purpose was to acquire Company A’s business and assets, not to recover the debt or achieve a proper statutory objective. [Para 97][Para 98][Para 137][Para 138]
- An implied term required the information-request power, and/or the appointment power, to be exercised honestly, in good faith, or only for legitimate commercial aims, relying on Braganza-type reasoning and Property Alliance Group. [Para 99][Para 192][Para 194][Para 195][Para 196]
- The waterfall agreement and remuneration letters did not amount to a waiver, estoppel, or abuse of process preventing Company A from challenging validity. [Para 100][Para 101][Para 102][Para 226]
Respondents' Arguments
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Three Rivers v Bank of England (No.3) [2003] 2 AC 1 |
On strike-out, the pleaded allegations are assumed true; summary judgment is different because evidence may be considered. |
The court used it to explain the procedural standards and noted that nothing material turned on the judge’s conflation of strike-out and summary judgment. [Para 76] |
| Re Aartee Bright Bar Ltd [2023] EWHC 606 (Ch); [2023] BCC 704 |
A security holder may be motivated in part by a desire to achieve statutory administration objectives, including independent control of assets. |
The court distinguished it as a case involving a genuine statutory purpose in an insolvent company, unlike the alleged sole improper purpose here. [Para 82][Para 83][Para 85][Para 185][Para 187][Para 188] |
| Braganza v BP Shipping Ltd [2015] UKSC 17 |
Contractual discretion may be subject to an implied duty not to be abused and to be exercised rationally in context. |
The court noted the analogy but later treated the information-request power as confined to legitimate commercial aims rather than an unfettered personal discretion. [Para 86][Para 87][Para 192][Para 194][Para 196] |
| LA Micro Group (K) Ltd v LA Micro Group Inc [2021] EWCA Civ 1429; [2022] 1 WLR 336 |
Estoppel by conduct / abuse of process is a broad, merits-based doctrine focused on inconsistent positions and whether an earlier result was procured on the earlier stance. |
The court relied on it for the abuse-of-process framework but held that the claim could not be summarily barred on the present facts. [Para 89][Para 202][Para 204][Para 205][Para 206][Para 218] |
| Malik v Malik [2024] EWCA Civ 1323; [2025] 4 All ER 409 |
Estoppel by conduct can readily be viewed as a species of abuse of process. |
The court referred to it as supporting the same broad doctrine, but it did not resolve the present claim against Company A. [Para 89][Para 206] |
| Cherry Tree Investments Ltd v Landmain Ltd [2012] EWCA Civ 736; [2013] Ch 305 |
Publicly registered charges raise issues about the weight to be given to extrinsic background material. |
The court discussed it but said it need not decide the point because Company A had not identified further admissible material that would change the construction analysis. [Para 125][Para 126][Para 127][Para 128][Para 129] |
| Pathway Finance SARL v The Defendants set out in Annex 1 to the Claim [2020] EWHC 1191 (Ch) |
There is no bright-line public/private document distinction; weight depends on the nature and circumstances of the instrument. |
The court cited it as support for treating admissible extrinsic material flexibly, rather than excluding it simply because the debenture was public. [Para 130][Para 131][Para 132][Para 133] |
| Downsview Nominees Ltd v First City Corporation Ltd [1993] AC 295 |
A mortgagee’s powers must be exercised in good faith for the purpose of obtaining repayment. |
The court used it as the principal equitable authority supporting the proposition that a solely collateral purpose can invalidate enforcement conduct. [Para 140][Para 141][Para 142][Para 143][Para 144] |
| Cukurova Finance International Limited v Alfa Telecom Turkey Ltd [2013] UKPC 2; [2016] AC 923 |
Mixed motives do not necessarily vitiate enforcement if the proper purpose of securing the debt is present; a purely collateral purpose is different. |
The court used it to contrast mixed-motive cases with Company A’s case, which alleged a sole improper purpose. [Para 146] |
| Property Alliance Group v Royal Bank of Scotland plc [2018] EWCA Civ 355; [2018] 1 WLR 3529 |
A contractual power to call for valuations is not wholly unfettered and may be impliedly limited to legitimate commercial aims. |
The court extended that logic to the debenture’s information-request power and allowed the alternative argument to proceed. [Para 192][Para 193][Para 194][Para 195][Para 196] |
| New Hampshire v Maine 532 US 742 |
Sets out factors for assessing whether inconsistent positions amount to abuse or estoppel by conduct. |
The court used the factors to explain why the abuse-of-process issue could not be decided summarily on the present materials. [Para 204][Para 205][Para 218] |
| Revenue and Customs Comrs v Benchdollar Ltd [2009] EWHC 1310 (Ch); [2010] 1 All ER 174 |
Estoppel by convention requires a shared assumption, reliance, and detriment. |
The court used those requirements to hold that the convention-estoppel issue raised factual questions unsuitable for summary disposal. [Para 220][Para 221][Para 222][Para 223][Para 224][Para 225][Para 226] |
| Tinkler v Revenue and Customs Commissioners [2021] UKSC 39; [2022] AC 886 |
Approved the Benchdollar formulation, subject to a minor caveat. |
The court cited it as confirming the estoppel-by-convention test. [Para 220] |
| Khan v Singh-Sall [2023] EWCA Civ 1119 |
Distinguishes between a true absence of jurisdiction and a case-specific statutory precondition to the exercise of jurisdiction. |
The court used it to explain why a pragmatic order could still be made notwithstanding arguments about validity. [Para 216] |
Court's Reasoning and Analysis
On construction, the court accepted that “Secured Assets” did not always mean all secured property everywhere in the debenture, but held that section 1.11.1 was not confined to tangible assets or to requests about all four features of an asset at once. [Para 107][Para 109][Para 110][Para 111]
The court reasoned that the words “location, condition, use and operation” were used disjunctively in context, so a request about any one feature could be valid, and information about cash balances, creditors, and intercompany lending could sensibly relate to the condition or operation of the undertaking. [Para 111][Para 114][Para 115][Para 116][Para 119][Para 120]
It also held that the document’s template history and the short-term, bridge-loan character of the facility did not undermine that construction, because those features did not cut against a broad right to request information. [Para 121][Para 122][Para 123][Para 124][Para 128][Para 129]
Accordingly, the court concluded that failure to answer the 15 July Requests was a breach of section 1.11.1 and therefore an event of default under the loan. [Para 134]
On improper purpose, the court held that Company A had a realistic prospect of proving that Company E’s sole subjective purpose in appointing administrators was to enable acquisition of Company A’s business and assets, rather than recovery of the debt. [Para 137][Para 138]
The court accepted the relevance of the receivership authorities, especially Downsview and Cukurova, as showing that a security-holder’s powers must be exercised for the proper purpose of securing repayment, although mixed motives do not necessarily invalidate enforcement. [Para 140][Para 143][Para 144][Para 146]
It rejected the respondents’ submission that administration is governed only by an objective statutory-purpose test, explaining that this confused the consequences of appointment with the subjective purpose for making it. [Para 154][Para 160][Para 161][Para 164][Para 165]
The court said paragraph 81 of Schedule B1 did not exclude reliance on equitable principles, and distinguished Aartee because that case involved a genuine statutory purpose in an insolvent company, not an alleged sole collateral purpose in a solvent one. [Para 170][Para 171][Para 173][Para 174][Para 179][Para 181][Para 185][Para 187][Para 188]
The court therefore held that a subjective improper purpose is capable of making an out-of-court appointment of administrators ineffective, and it would not treat ordinary loan-to-own cases as automatically comparable to this unusual fact pattern. [Para 183][Para 166][Para 167][Para 168][Para 190]
As to the implied-term point, the court indicated that the information-request power was properly read as limited to legitimate commercial aims, citing Property Alliance Group, but said that point did not need to be finally resolved to dispose of the appeal. [Para 192][Para 194][Para 195][Para 196]
On estoppel and abuse of process, the court found that the earlier remuneration proceedings were primarily for the administrators’ benefit, that Company A was not itself a party to those proceedings, and that the outcome may have been capable of pragmatic treatment even if validity had been raised. [Para 197][Para 198][Para 203][Para 208][Para 209][Para 213][Para 215][Para 216]
For that reason, the court held that it could not say, on a broad merits-based assessment, that Company A’s claim was unarguably abusive; estoppel by conduct therefore could not support strike-out. [Para 204][Para 205][Para 207][Para 218]
It further held that estoppel by convention required a shared assumption, reliance, and detriment, all of which raised factual questions for trial, and that representation and deed could not succeed at the summary stage if convention failed. [Para 220][Para 221][Para 222][Para 223][Para 224][Para 225][Para 226][Para 229]
Holding and Implications
APPEAL ALLOWED IN PART. The court upheld the finding that failure to respond to the 15 July Requests breached section 1.11.1 and triggered default, but held that Company A’s claim that the administrators were invalidly appointed had a realistic prospect of success and should not have been struck out or dismissed summarily. [Para 134][Para 137][Para 183][Para 218][Para 230]
The practical result is that Company A’s invalid-appointment claim may proceed, and the judgment confirms that an out-of-court administrator appointment can be ineffective if the appointor’s sole purpose was improper, while stressing that the facts were unusual and not representative of ordinary creditor enforcement cases. [Para 166][Para 168][Para 183][Para 190]