Kerry Underwood

JOINDER UNDER CPR 19.2(2) APPROPRIATE WHERE APPLICANT ESTABLISHES SUFFICIENTLY DIFFERENT PERSPECTIVE

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In September and October I am delivering my new course – Getting the Retainer Right – details and booking form here.

In Re LB Holdings Intermediate 2 Ltd (in administration) and Re Lehman Bros Holdings plc (in administration) [2018] EWHC 2017 (Ch) (24 July 2018)

D and L applied under CPR 19.2(2) to be joined as respondents to proceedings brought by the administrators of a company in the Lehman group (I2 proceedings).

Those proceedings had been conjoined with other proceedings (PLC proceedings) brought by the administrators of another group company (PLC).

D was a respondent in the PLC proceedings, as a subordinated creditor of PLC, and PLC’s administrators were respondents in the I2 proceedings.

D argued it had a “separate perspective” because it was the only party seeking to establish the relative priority for the payment of certain loans made by PLC to I2; PLC’s administrators were taking a neutral stance in the PLC proceedings and adopting a positive case in the I2 proceedings.

L argued that it also had a separate perspective, and that the neutrality of the PLC administrators might hamper the argument in the I2 proceedings.

Mann J granted D’s application to be joined but refused L’s.

Although both parties had sufficient economic interest to justify joinder, it would not be ordered speculatively and the parties had to make out a positive case.

For D, the neutrality of PLC’s administrators in the PLC proceedings was “technical”, and would not hamper them from adducing arguments in the I2 proceedings.

However, D had established, by a narrow margin, a sufficient difference in its perspective, and a vigour in relation to the proceedings, to make it appropriate to order joinder.

D’s undertakings not to duplicate effort or add to costs were important.

Although L demonstrated a strong economic interest, that was insufficient.

L had not identified any arguments not being advanced by another party, and did not have any further perspective to contribute.

The fruits of L’s document review work in the previous Lehman litigation could be made available “in a perfectly efficient and sensible manner without joinder”.

The decision emphasises that joinder will not be ordered on a speculative or precautionary basis; a positive case must be made out.

The court endorsed the approach taken in the Lehman Waterfall III proceedings (24 June 2016, unreported), namely that in complex insolvencies involving large numbers of parties, the court must be on its guard to keep representation within proper bounds, only allowing in parties who have some separate perspective or legal interest to illuminate for the benefit of the court.

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Written by kerryunderwood

September 26, 2018 at 8:06 am

Posted in Uncategorized

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