London ConstructionThe case of Davey v Money and Anor (2018) EWHC 766 (Ch) should serve as a gentle warning to secured creditors to be aware of the level of their involvement in the administration of a customer.


Angel House Development Limited (“AHDL“), a property development company, borrowed £16 million from Dunbar Assets Plc (“Dunbar“) in order to fund the purchase and redevelopment of a property, Angel House, in Tower Hamlets. Dunbar took security for the loan(s) in the form of a debenture.

Despite several discussions, extensions and amendments to the facility, AHDL defaulted on the loan after failing to obtain planning permission for the property. Pursuant to the terms of its qualifying floating charge, Dunbar appointed James Money and Jim Stewart-Koster as joint administrators (the “Administrators“) of AHDL.

Following the sale of Angel House by the Administrators, AHDL moved from administration to creditors voluntary liquidation.

Claim against the Administrators

The Claimant, Ms Davey, was the sole director and shareholder of AHDL and a guarantor of its indebtedness to Dunbar (capped at £1.6m). She brought a claim against the Administrators under paragraph 75 of Schedule B1 of the Insolvency Act 1986, claiming that they had failed in their duties as administrators by favouring the interests of Dunbar over those of AHDL and its other creditors.

She made several arguments in support of her claim, most of which concerned the sale of Angel House by the Administrators. In particular, she argued that as a result of the Administrators using an incorrect valuation obtained by Dunbar, Angel House had been sold at an undervalue.

The judge discounted these arguments. One of the reasons he gave was that the evidence which had been presented to the Court demonstrated that the property had been sold at market value. Therefore, it did not matter that the administrators had used a valuation obtained by Dunbar to market and sell Angel House because the value received had still been accurate.

Ms Davey’s other arguments concerned allegations that Dunbar and the Administrators had colluded by agreeing to conduct a “light touch” administration. She alleged that the agents appointed for the sale of Angel House had not been independently selected by the Administrators but instead had been hand-picked by Dunbar. There was no dispute that the agents were initially instructed by Dunbar. However, the judge held that it was not necessary for a company or its administrators to hold a formal selection/tendering process when appointing agents. They could appoint specific agents who were recommended to them (whether by the secured creditor or someone else). What was most important was to show that the agents were competent and able to discharge their fiduciary duties to the company. Therefore, the appointment of the agents selected by Dunbar did not necessarily compromise the administrator’s independence. The judge also found there was no evidence that the administrators had colluded with Dunbar. He held that the Administrators had acted independently and had not breached their duties as administrators.

Claim against Dunbar

Ms Davey also brought a claim against Dunbar on three grounds, namely that Dunbar:

  1. had interfered with the conduct of the Administrators to such an extent that its conduct had made the Administrators its agents thus rendering Dunbar liable for their breaches of duty;
  2. procured the breaches of duty by the Administrators; and
  3. conspired to cause loss to AHDL and Ms Davey by unlawful means.

The claim against Dunbar failed because the judge had already decided that there had been no breach of duty or wrongdoing on the part of the administrators.

Actions of secured creditors

Although Ms Davey’s claims were unsuccessful, the judge did consider the implications for secured creditors by briefly discussing when a secured creditor may be liable for claims such as those brought by Ms Davey. The judge’s findings are summarised below:

  • In order for a Court to find that an agency relationship has been created between the administrator and secured creditor, the secured creditor will need to have interfered with or directed the conduct of the administration. In addition to that, the administrators need to have been compliant with, or unable to prevent, the interferences and directions of the secured creditor. For example, if the secured creditor gives the administrators directions which they unquestioningly follow, it is likely that the administrators will be perceived as agents of the secured creditor.
  • In order for a Court to find that a secured creditor has procured breaches of duty by the administrators, there will need to be proof that a relevant person at the secured creditor (i.e. a director) had the requisite knowledge and intention to cause the administrators to act in breach of duty.


Much of this case turns on the facts and evidence presented to the Court. The sheer length of the case transcript shows how much evidence was presented to the Court from witnesses and experts. It is clear from the transcript that the Court relied heavily on records kept by the parties before, during and after the administration of AHDL.

As well as being a gentle warning to secured creditors to consider the extent and nature of their involvement with an administration, it is also a cautionary reminder to administrators, creditors and companies to keep clear and full records of all decisions taken and discussions had throughout an administration just in case they need to justify their conduct at a later date.