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Cite as: [2018] EWHC 540 (Ch)

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Neutral Citation Number: [2018] EWHC 540 (Ch)
Case No: CH-2016-000259


Royal Courts of Justice
Strand, London, WC2A 2LL
16 March 2018

B e f o r e :

Sarah Worthington QC(Hon)
sitting as a deputy High Court judge


- and -

(1) STEPHEN KATZ (acting as joint liquidator of MK Airlines)
(2) CARL BOWLES (acting as joint liquidator of MK Airlines)


Ms Tina Kyriakides (instructed by Addleshaw Goddard LLP) for the Appellant on 18 and 19 July 2017
And the Appellant as a Litigant in Person on 30 November 2017
Mr Matthew Abraham (instructed by Stephenson Harwood LLP) for the Respondents

Hearing dates: 18 and 19 July 2017 and 30 November 2017



Crown Copyright ©

    Ms Sarah Worthington QC(Hon):

    1. Introduction

  1. This appeal is against orders made following successful misfeasance claims brought by the joint liquidators of an insolvent company against one of its former administrators. The misfeasance claim was brought under Schedule B1 of the Insolvency Act 1986 ("IA 1986"), para 75(2). The administrator's misfeasance, as found by the lower court, consisted in paying out company funds in breach of the priority rules set down by the Insolvency Rules 1986 ("IR 1986") r.2.67, and thus leaving an unacceptable shortfall in payments to the administration expense creditors.
  2. In this court the judgment of the lower court was challenged by way of appeal on three broad grounds (although neither side put the matters in quite this way): first, that the funds used in this way were not company funds, but were derived from a third party indemnity arrangement set up for precisely that purpose; secondly, and only if that first argument failed, that even if the funds used were company funds, their use did not constitute a misfeasance in the circumstances; and, finally, if that argument also failed, then the misfeasance was not one warranting the order for repayment made by the lower court. The detail is of course more complicated, as appears later.
  3. Turning to specifics, the order made by Registrar Derrett in the lower court (the "Derrett Order", made pursuant to IA 1986 Schedule B1 para 75(4)) provided that the Appellant, Michael Oldham, a former administrator of MK Airlines Ltd ("MKA"), pay to the Respondents, Stephen Katz and Carl Bowles, as joint liquidators of MKA:
  4. "the sum of £1,035,326.28 comprising of:
    (1) £853,905.10 being the remuneration and disbursements drawn down contrary to r.2.67(1) of the Insolvency Rules 1986 plus interest at 2.25% (current base rate plus 2%) from 09 March 2009 to 05 October 2016;
    (2) £25,745.59 plus VAT being the payments made to Salans pre-administration plus interest at 2.25% (current base rate plus 2%) from 30 June 2008 to 05 October 2016.
    by 4 pm on 19 October 2016 together with interest pursuant to section 17(1) of the Judgements Act 1838 on the outstanding balance of such sum, such interest to run from the date of this order until payment."

    The order also made provisions for costs and other related and consequential matters, and stayed execution of the order until determination of an application for permission to appeal. For the avoidance of confusion, I refer throughout (even in the context of considering the hearing in the lower court) to the Appellant (the former administrator) and the Respondents (the joint liquidators) as they appeared before me, even though, in the lower court, they were the Respondent and the Applicants, respectively.

  5. This judgment addresses the issues in this order:
  6. 1. Introduction
    2. History of the earlier proceeding
    3. Facts
    4. Judgment of the lower court
    5. Summary of the grounds of appeal
    6. Preliminary procedural issues
    7. Determination of the grounds of appeal
    8. General comments
    9. Conclusions
  7. In the hearing before me it became evident that both parties are determined to take every point open to them. The issues are important for both sides. I therefore attempt here to be comprehensive in my coverage of the matters raised before me. The result is a judgment that is long, and may well seem excessively so, especially given my early findings on the fundamental issues raised on appeal.
  8. 2. History of the earlier proceedings

  9. Proceedings leading to this appeal were commenced in 2014. Their detail provides important context. Initial applications were filed by the Respondents on 8 July 2014, then amended on 18 September 2014 to exclude reference to the two administrators who had been appointed jointly with the Appellant. The necessary permission to make the application (see Schedule B1, para 75(6)) was granted by Registrar Derrett on 28 July 2015, with a final hearing on 5 July 2016, and a hand down hearing on 5 October 2016. At the hand down hearing the Registrar also dealt with quantifying the Salans sums to appear in the order, finding in favour of the Respondents' submissions, not the Appellant's.
  10. The Derrett Order refused permission to appeal, but stayed execution until determination of any application for permission to appeal. That application was granted by Nugee J on 29 October 2016, and the Derrett Order again stayed pending determination of the appeal or further order. Nugee J also ordered that the Appellant's application to adduce further evidence should be heard with the appeal.
  11. This appeal was heard on 18 and 19 July 2017, with a further half day on 30 November 2017 for reasons explained below at paras 81–83 ("the Quistclose point"). This judgment deals with the substance of the Appellant's appeal. It also deals with the Appellant's application to amend the grounds of appeal and both parties' applications to adduce further evidence, and notes the Respondents' oral application on the first day of hearing for an adjournment if new evidence was to be allowed, in order to enable the submission of new evidence in response.
  12. The Respondents stress that the Appellant's arguments have changed at each stage of the proceedings. Some changes are matters of style, but others are matters of substance, as noted below. This tracks changes in the Appellant's legal representation. During the initial stages, including the permission hearing, the Appellant was represented by counsel appointed on a direct access basis. Just prior to the final hearing, the Appellant changed his legal representatives, appointing lawyers who instructed new counsel. The day before the hand down hearing, counsel was dis-instructed and Ms Tina Kyriakides appointed. For the purposes of this appeal hearing, the Appellant was represented by different lawyers, Addleshaw Goddard LLP, and Ms Tina Kyriakides of Counsel. The Appellant appeared as a litigant in person for the additional half day hearing on the Quistclose point, although his counsel had made earlier written submissions.
  13. 3. Facts

  14. MK Airlines Ltd ("MKA") was incorporated in 1990. It carried on business as a cargo airline from premises in East Sussex, flying principally between Europe and Africa. Over a 28 month period between 2008 and 2010 it went into two successive administrations, emerged successfully, and then 15 months later went into insolvency, with the evidence suggesting it then had debts of over US$100 million.
  15. The detailed chronology, so far as relevant, is as follows:
  16. i) On 10th June 2008 the directors of MKA appointed Mr Michael Oldham (the Appellant) and two of the then partners of Bridge Business Recovery LLP ("BBR", referred to as such despite some name changes) as joint administrators of the failing MKA (the "Bridge Administrators"). The Appellant was a consultant to BBR, full-time for the period of the Bridge Administration, not a partner.

    ii) Later that month negotiations began for a proposed sale of MKA to Transatlantic Aviation Ltd ("TAA"), a purchaser who had a particular desire to maintain MKA as a going concern in order to benefit from its valuable Civil Aviation Authority ("CAA") Air Operator Certificate ("AOC").

    iii) To facilitate that objective, TAA agreed to provide funding of up to US$18 million (the "Facility") to ensure that MKA could trade during the period of Administration. It also agreed to provide US$750,000 by way of lump sum funding to pay certain pre-administration creditors and support the implementation of a CVA. The goal was to rescue MKA and enable it to resume operations as a solvent company.

    iv) A Deed of Indemnity dated 20 June 2008 (the "Deed") setting out the terms of the Facility was entered into between TAA, MKA, the Bridge Administrators, other companies in the MK group and certain other parties. The Deed provided that if the CVA was implemented, the shares in MKA would be transferred by their owner (MK Investments Ltd) to TAA for US$1 (one US dollar), and the Facility arrangements would be implemented. If the CVA was rejected, TAA's alternative proposal was simply to purchase the fixed assets of MKA and another company in the MK group for US$2 million.

    v) On 26 November 2008, the creditors of MKA approved the CVA. However, the CAA was unwilling to transfer the AOC and, to maintain operations, the Bridge Administrators continued to trade under the banner of administration.

    vi) During the Bridge Administration, sums drawn down from the Facility were received into MKA's USD bank accounts and were not segregated from other sums that were paid into those accounts.

    vii) The Bridge Administrators drew various amounts from the accounts of MKA during the period of their administration, of which £853,905.10 (net of VAT) was used to pay their remuneration and disbursements.

    viii) In March 2009, with the Bridge Administration incurring losses, the CAA still unwilling to transfer the AOC, and TAA refusing to accept requests for further advances under the Facility, the relationship between the Bridge Administrators and TAA deteriorated. The Bridge Administrators therefore applied to the court to remove themselves as administrators.

    ix) On 9 March 2009, the Court ordered that the Bridge Administrators be replaced as administrators of MKA by partners of Grant Thornton LLP (the "GT Administrators"). This suited TAA, since it still wished to achieve the rescue of MKA so that it could benefit from its AOC, and therefore wanted a continuing period of administration rather than a descent into insolvency.

    x) On 24 June 2009, the GT Administration ended, and the business of MKA was returned to the control of its owner, TAA. Various guarantees and undertakings were given by TAA and one of its directors in order to achieve this result. These guarantees and undertakings explicitly covered the Bridge Administrators' remuneration and expense creditors.

    xi) Only nine months later, on 12 April 2010, a petition to wind up MKA was presented by one of its creditors.

    xii) On 22 June 2010, on their own application, the GT Administrators were appointed as provisional liquidators in order to protect the assets subject to the charge created in their favour under paragraph 99 of Schedule B1 of the IA 1986.

    xiii) On 6 October 2010, MKA was wound up by order of Lewison J. The Respondents are the Joint Liquidators: Mr Katz from 7 October 2010 (initially with Mr Alexander as Joint Liquidator), and Mr Bowles from 1 September 2014 (on the retirement of Mr Alexander).

    xiv) On 26 April 2012, in Re MK Airlines Ltd (in liq) [2012] EWHC 1018 (Ch), the Chancellor held that there were two charges created pursuant to paragraph 99 of Schedule B1 of the IA 1986 arising on the dates of the cessation of the Bridge Administrators' and the GT Administrators' appointments (the "Bridge Para 99 Charge" and the "GT Para 99 Charge").

    xv) On 8 July 2014, the Respondents commenced proceedings against the Appellant leading to this appeal.

    4. The decision of the lower court

  17. As set out in para [1] of the Registrar's judgment, the Respondents requested a declaration that the Appellant had misapplied MKA's property and/or had become accountable for money of MKA and/or was guilty of misfeasance and breach of fiduciary and/or other duty in relation to MKA as described in paragraph 75(2) Schedule B1 of the IA 1986, and, accordingly, that an order be made pursuant to paragraph 75(4) that the Appellant repay, restore or account for money or property of MKA.
  18. The particular misfeasances alleged by the Respondents were that the Appellant had (i) used MKA funds to pay remuneration and disbursements inconsistently with the statutory priority rules relating to the payment of expenses in an administration set out in IR 1986 r.2.67(1), or (ii) had drawn remuneration without the approvals required by IR 1986 r.2.106(3C), and (iii) had paid pre-administration costs contrary to IR 1986 r.2.67(1) or without the approval required by IR 1986 r.2.67A.
  19. The Registrar found in favour of the Respondents and their proposed analysis on all the issues other than (ii), where she held that the Appellant's remuneration had been properly approved by the creditors. This finding is not appealed.
  20. In the course of her judgment, the Registrar set out the law on the duties owed by an administrator, the statutory priority of expenses in an administration (Insolvency Rules 1986 r.2.67(1)), the fact that it is not possible to contract out of this statutory scheme (citing cases including British Eagle International Airlines Ltd v Compagnie Nationale Air France [1975] 1 WLR 758, 780-781 and Belmont Park Investments Pty Ltd v BNY Corporate Trustee Services Ltd [2012] 1 AC 383, [6]-[15]), the rules for approval of an administrator's remuneration (IR 1986 r.2.106 as it was at the time – see Registrar's judgment, para [13]), and the rules on approval of pre-administration costs (IR 1986 r.2.67A as defined in r.2.33(2A)). None of this is in dispute.
  21. The Registrar then applied these rules to resolve three particular issues set out in para [16] of her judgment: (i) What is the proper interpretation of the Deed? (ii) Was MKA solvent at the time the Bridge Administrators were removed in favour of the GT Administrators? And, (iii) if the Appellant was guilty of misfeasance, what, if anything, should he be ordered to pay to the Respondents? The Registrar's approach is outlined below. References in square brackets are to paragraphs in her judgment.
  22. 4.1 Construction of the Deed

  23. As remains the case, the Respondents asserted that monies paid pursuant to the Deed were an asset of MKA, whereas the Appellant asserted that the Deed provided for an indemnity for the fees of the Bridge Administrators and monies paid under the deed therefore did not become an asset of MKA ([16 i)]).
  24. The Registrar held that where it was clear that the money used to pay the Bridge Administrators' remuneration was MKA money, there was then "no need to construe the Deed" ([20]). She held that was the position on the facts in this case, since the funds provided by TAA pursuant to the Deed were received by MKA into its USD bank accounts, were not segregated, and thus, legally, "became the property of MKA" ([18]), in circumstances where "there was no trust, and no segregation" ([20]). In any event, the Bridge Administrators had in fact drawn their remuneration and disbursements from different MKA bank accounts which were undoubtedly MKA property ([18]). The Bridge Administrators were thus automatically in breach of the priority rules set out in IR 1986 r.2.67(1) (although presumably only if there was a shortfall to the expense creditors).
  25. The Registrar nevertheless proceeded to construe the Deed and found that the Facility was intended to be for the benefit of the company, being the means by which TAA would acquire MKA, and was not intended as a personal indemnity to the Bridge Administrators ([28], and also see [25]-[27]). It followed that, as an asset of MKA, the Facility had to be used in accordance with IR 1986 r.2.67(1).
  26. The Registrar did not accept the Appellant's argument that the Bridge Administrators could have demanded that the sums due as their remuneration be paid to them directly, or paid into a separate account ([22]-[24]), and further held – it seems – that even had this been so, and had the sums then been paid by "mistake" into MKA accounts, it would make no difference since there would be no constructive trust ([23]).
  27. Finally, the Registrar appears to have agreed with the Respondents that any clauses in the Deed that attempted to alter the statutory priorities as set out in IR 1986 r.2.67(1) ought to be held unlawful as improper attempts to contract out of the statutory scheme ([27 vii)] and [28]).
  28. 4.2 Was the Administration solvent?

  29. As The Registrar put it, if the Administration was solvent at the time the Bridge Administrators handed it over to the GT Administrators, then "it is difficult to see how the Bridge Administrators can have been guilty of misfeasance" ([16]). The reason is plain: if solvent, then sufficient funds must have existed for payment of all the administration expense creditors despite any remuneration payments.
  30. On the issue of solvency, neither party seemed able to provide irrefutable evidence (see [38]), but the Registrar preferred the Respondents' evidence, on the balance of probabilities ([40]), and thus found that the Administration was not solvent when the Bridge Administrators handed it over to the GT Administrators ([43]). From this the Registrar appears to have concluded that there was then inevitably a misfeasance by way of payment of remuneration in contravention of the priority rules set out in IR 1986 r.2.67 ([43]).
  31. 4.3 Quantum – if the Appellant has been guilty of misfeasance, what, if anything, should be ordered to be paid to the Respondents by the Appellant?

  32. The Registrar devoted two paragraphs in her judgment specifically to the issue of quantum (see "Quantum" at [44]-[45]), but also made relevant findings elsewhere in her analysis. In summary, she concluded, first, that it made no difference that the Bridge Administrators' remuneration had been approved by the creditors ([46]-[47]). That is uncontroversial: even when the quantum of remuneration is approved, the relevant sums can only be paid out in accordance with the priority rules in IR 1986 r.2.67(1).
  33. Secondly, by inference from the Registrar's various findings, the Appellant himself could be required to pay over a sum equal to the total of the Bridge Administrators' remuneration payments even though (i) there were other joint administrators ([43], and also see [48]); (ii) it was not clear which of them had requested the payments from MKA funds or who had received the funds so paid ([30], [43]-[44], although see the final sentence in [32]); and (iii) there was a settlement agreement between MKA and two of the three joint administrators ([43]).
  34. Finally, to the extent that the court had a general discretion as to quantum in orders made under Schedule B1 para 75(4) (i.e. "the court may order…"), the Registrar was not prepared to exercise that discretion in the Appellant's favour in circumstances where the Bridge Administrators had improperly sought by contract to vary the statutory priority rules ([45], and also [28], [27 vii)]), especially in circumstances where the expense creditors faced a shortfall and benefits by way of remuneration had been received by the administrators ([32], [44]).
  35. 4.5 Pre-administration expenses

  36. As a separate matter, the Registrar held that certain payments made to the Bridge Administrators' solicitors, Salans, included invoices for work which predated the administration, and which was thus paid out contrary to IR 1986 r.2.67(1) and/or contrary to r.2.67A since no approval was sought in relation to the payments. Since Salans acted generally in the MK group administrations, the gross payments to Salans needed to be apportioned as between the several different companies in the MK group to whom the services related, and then in the case of each company apportioned as between pre- and post-administration expenses. That apportionment was determined at the hand down hearing.
  37. As with the payments of remuneration, this particular misfeasance was necessarily also conditional on the finding that MKA was insolvent at the date of transfer from the Bridge Administrators to the GT Administrators.
  38. Also as with the payments of remuneration, and presumably for the same reasons, the Registrar then made an order against the Appellant for payment of the full apportioned sum determined to have been paid by way of unauthorised pre-administration expenses in the Bridge Administration ([48]).
  39. 5. Summary of the grounds of Appeal

  40. The Appellant's twelve very detailed grounds of appeal, as amended, accompanied by a skeleton argument of 36½ pages, must be summarised. The separately listed points in the Appellant's Appeal Notice display some overlap, but the essential elements of the Appellant's submissions might be put as follows:
  41. 1. Construction of the Deed and its practical consequences: The Registrar's construction of the Deed was wrong in law, as were her conclusions on the consequences of mixed funds in bank accounts. The Registrar should instead have held that the money drawn down under the Facility was the Bridge Administrators', not MKA's, and that it did not become MKA's merely because it was mixed in MKA's accounts; and that its subsequent withdrawal to pay remuneration was not a misfeasance/did not result in loss to MKA.

    2. Solvency: The Registrar was wrong to find that the Bridge Administration was insolvent as at 9 March 2009 (when it was transferred to the GT Administrators) and/or that there were insufficient assets subject to the Bridge Para 99 charge to cover the unpaid expense creditors, and her reasons for so doing involved serious procedural and other irregularities. In addition to the disputed value of the Bridge Administration at the date of transfer to the GT Administrators, the Registrar also incorrectly chose to disregard particular assets available to MKA on 9 March 2009, including the balance of funding due under the Facility in the sum of US$3.2 million.

    3. Quantum referable to the Bridge Administrators' misfeasance: Even if MKA was insolvent on 9 March 2009 when it was transferred to the GT Administrators, the Registrar failed properly to consider, or to consider at all, whether (a) MKA's insolvency necessarily indicated a shortfall to the expense creditors, whatever the asset position of the company; (b) whether any such shortfall was caused by the Bridge Administrators' breaches of duty or caused by other events; and (c) if losses were so caused, whether they were greater than the total amount of the remuneration paid.

    4. Quantum properly referable to the Appellant: Even if MKA monies had been misapplied, the Registrar erred in ordering the Appellant to pay an amount equal to the entire remuneration payments. In reaching her conclusion, the Registrar failed to take due account of (a) the fact that the Appellant had not participated in the misfeasance, having neither invoiced MKA for the remuneration sums, nor received any of the payments; or (b) the particular aspects of the Appellant's evidence relating to the final transfer of US$448,208.97 on 5 March 2009 to BBR in part-payment of remuneration. In addition, in requiring the Appellant to repay the entire remuneration sum, the Registrar failed to exercise her discretion properly.

    5. Proof of individual or joint and several liability of the Appellant for misfeasance: The Registrar was wrong in law to assume that simply because monies had been misapplied by the Bridge Administrators, each joint administrator was jointly and severally liable for that breach; she should, instead, have considered the particular misfeasance of the Appellant.

    6. Relief under CA 2006 s 1175: The Registrar failed to consider whether the Appellant should be excused in whole or in part from his breaches of duty under this section.

    7. Salans payment/pre-administration creditors: In view of the Registrar's factual findings, she was wrong in law to hold that the Appellant was in breach of duty in relation to the payment of monies to Salans for work carried out prior to the administration of the company.

  42. If the Appellant succeeds on any one of the grounds of appeal in 1-6 above, then he will succeed in whole or in part in overturning the Derrett Order so far as it relates to orders for the repayment of remuneration. A similar conclusion follows in relation to the Salans payment if the Appellant succeeds on point 7.
  43. Four further matters should be noted. First, the grounds of appeal numbered (5) and (6) concern matters not specifically argued before the Registrar. Secondly, the specific matters addressed in ground (3) were merged rather loosely within consideration of matters raised in ground (2) in the hearing before the Registrar, whereas on this appeal the precise extent of the shortfall to the expense creditors was explicitly highlighted. Thirdly, in the hearing before the Registrar the matters raised in ground (4) were merged, along with other matters, in a general consideration of how the Registrar should exercise her discretion in making the order. Fourthly, this list includes the Appellant's proposed amendments to the original grounds of appeal (those amendments being the inclusion of grounds (4) and (5)), the application for which was advanced on this appeal and is dealt with below at para 44.
  44. 6. Preliminary procedural issues

  45. Several preliminary applications and important incidental issues are addressed in this section, including: (i) an application by the Appellant to amend the grounds of appeal; (ii) resolution of the issues relating to the introduction of new points on appeal; (iii) an application by the Appellant to adduce fresh evidence (which, if allowed, would be met by a corresponding application by the Respondents); (iv) an application by the Respondents to adjourn should the Appellant succeed in his application to adduce new evidence; and (v) the "Quistclose point" (see below at paras 81 – 83).
  46. In this context, and especially given the particular arguments advanced by the Appellant concerning the lower court's assessment of evidence and its exercise of discretion, as well as the Appellant's new arguments (or perhaps new ways of running old arguments) before this court, and the Respondents' corresponding resistance to those arguments, it is also necessary to consider the general limits to the powers of appeal courts. That is perhaps the place to start, even though these matters are rarely so prominent in appeal hearings.
  47. 6.1 Limits to the jurisdiction of appeal courts

  48. The relevant rules are set out in CPR 52.21. An appeal is to be allowed if the decision of the lower court was "wrong" or "unjust because of a serious procedural or other irregularity" (CPR 52.21(3)). In Tanfern Ltd v Cameron-MacDonald [2000] 1 WLR 1311, [32]-[33], Brooke LJ elaborated the meaning behind those words:
  49. "32 The first ground for interference speaks for itself. The epithet "wrong" is to be applied to the substance of the decision made by the lower court. If the appeal is against the exercise of a discretion by the lower court, the decision of the House of Lords in G v G (Minors: Custody Appeal) [1985] 1 WLR 647 warrants attention. In that case Lord Fraser of Tullybelton said, at p. 652:
    "Certainly it would not be useful to inquire whether different shades of meaning are intended to be conveyed by words such as 'blatant error' used by the President in the present case, and words such as 'clearly wrong,' 'plainly wrong,' or simply 'wrong' used by other judges in other cases. All these various expressions were used in order to emphasise the point that the appellate court should only interfere when they consider that the judge of first instance has not merely preferred an imperfect solution which is different from an alternative imperfect solution which the Court of Appeal might or would have adopted, but has exceeded the generous ambit within which a reasonable disagreement is possible."
    33 So far as the second ground for interference is concerned, it must be noted that the appeal court only has power to interfere if the procedural or other irregularity which it has detected in the proceedings in the lower court was a serious one, and that this irregularity caused the decision of the lower court to be an unjust decision."
  50. A decision of the lower court may be "wrong" in law, in fact, or in the exercise of the court's discretion (CPR 52.21.5). Decisions that are "wrong in law" are perhaps the most straightforward, since the assumption is that there is only one right answer to the question posed.
  51. Decisions may alternatively be "wrong in fact" if the lower court erred in finding on the balance of probabilities that something existed or occurred. However, appeal courts show great deference to the substantive factual findings of lower courts, especially when oral evidence has been heard (not an issue in this appeal): Manning v Stylianou [2006] EWCA Civ 1655, [19] (Waller LJ). More recent cases, including at Supreme Court level, appear increasingly reluctant to interfere: see Henderson v Foxworth Investments Ltd [2014] UKSC 41, [2014] 1 WLR 2600, especially [62] and [67]; although see Frank Perry v Raleys Solicitors [2017] EWCA Civ 314. In UBS AG (London Branch) v Kommunale Wasserwerke Leipzig GmbH [2017] EWCA Civ 1567, at [246], Lord Briggs and Hamblen LJ reviewed the authorities and concluded that "such interference [i.e. concluding that the lower court's decision is wrong in fact] will only be justified where a critical finding of fact is unsupported by the evidence or where the decision is one which no reasonable judge could have reached." That is a high hurdle.
  52. Where findings of primary fact shade into evaluations of those facts and inferences to be drawn from them, then the lower court's decision similarly shades into an exercise of discretion upon which reasonable people might disagree. The relevant test of whether the decision is "wrong" similarly shades into the test applicable to the exercise of discretion: McGraddie v McGraddie [2013] UKSC 58, [2013] 1 WLR 2477. Also see Floyd LJ in Wellesley Partners LLP v Withers LLP [2015] EWCA Civ 1146, [2016] Ch 529 at [125]: "This court is notoriously reluctant to interfere with evaluative judgments of this kind in the absence of an error of principle: see for example per Lord Hoffmann in Biogen Inc v Medeva plc [1997] RPC 1, 45."
  53. Finally, when determining whether an order made by the lower court is "wrong" because of the way a discretion was exercised, the governing principles from Tanfern Ltd v Cameron-MacDonald [2000] 1 WLR 1311, [32]-[33] were cited earlier. An even more direct description is to be found in the judgment of Lord Woolf MR in AEI Ltd v PPL [1999] 1 WLR 1507, 1523C—D:
  54. "Before the court can interfere it must be shown that the judge has either erred in principle in his approach or has left out of account or has taken into account some feature that he should, or should not, have considered, or that his decision was wholly wrong because the court is forced to the conclusion that he has not balanced the various factors fairly in the scale."
  55. All of this is robustly summarised by Lord Reed JSC in Henderson v Foxworth Investments Ltd [2014] UKSC 41, [2014] 1 WLR 2600 at [66]-[67] (other members of the Court agreeing), noting especially:
  56. "62 [On the meaning of the phrase "plainly wrong",] [t]he adverb "plainly" does not refer to the degree of confidence felt by the appellate court that it would not have reached the same conclusion as the trial judge. It does not matter, with whatever degree of certainty, that the appellate court considers that it would have reached a different conclusion. What matters is whether the decision under appeal is one that no reasonable judge could have reached. …
    67 It follows that, in the absence of some other identifiable error, such as (without attempting an exhaustive account) a material error of law, or the making of a critical finding of fact which has no basis in the evidence, or a demonstrable misunderstanding of relevant evidence, or a demonstrable failure to consider relevant evidence, an appellate court will interfere with the findings of fact made by a trial judge only if it is satisfied that his decision cannot reasonably be explained or justified."

    This return to the "plainly wrong" test was followed in Patrick v McKinley [2017] EWCA Civ 2068.

  57. This reluctance of appeal courts to hold the decisions of lower courts to be "wrong" or "unjust because of a serious procedural or other irregularity" (on the latter test, see Tanfern, [33], cited above at para 35), is mirrored in their similar reluctance to allow parties to adduce fresh evidence, insert new grounds of appeal, or have the court engage in a re-hearing rather than a review: CPR 52.21(2), (5) and (1). As to the exceedingly thin line between a "review" and a "re-hearing" when the appeal court is being asked to reverse findings of fact, as opposed to the considerable difference between the two when the appeal court is addressing a challenge to the evaluation of facts or the exercise of the discretion, see the very useful assessment of Clarke LJ in Assicurazioni Generali SpA v Arab Insurance Group [2002] EWCA Civ 1642, [2003] 1 WLR 577.
  58. The evident disinclination of appeal courts to interfere with or replicate the functions of lower courts reflects their desire to deliver the overriding objective of dealing with cases justly and at proportionate cost (CPR 1.1). That requires holding the balance between the attraction of delivering the right answer on the issues and the competing attraction of finality in litigation: Jones v MBNA International Bank (unreported, CA(Civ), 30 June 2000), at [22].
  59. I endeavour to hold that difficult balance in determining the various matters considered below.
  60. 6.2 Application by the Appellant to amend the grounds of appeal

  61. The Appellant applied for permission to amend his grounds of appeal to include Grounds 4 and 5 (as I have numbered them, not as numbered by the Appellant: see above, para 30) (CPR r52.17). Those grounds had been included in their full detail in counsel's skeleton argument, on the basis of which Nugee J had granted permission to appeal on 29 October 2016. Since the appeal was not heard until July 2017, the Respondents were on notice of all the relevant detail, and as, in that sense, the proposed amendments to the Appeal Notice did not visit particular prejudice on the Respondents, the Respondents did not formally oppose the application. Accordingly, but importantly subject to what is said in the next section, this appeal was run on the basis of the Amended Appeal Notice, without further argument before me.
  62. 6.2 New points raised by the Appellant on appeal

  63. Although the Respondents did not oppose the Appellant's application to amend the grounds of appeal, they expressed deep concern more broadly that both the original and amended grounds of appeal sought to raise matters of law and fact not specifically raised in the lower court or at the permission hearing. In short, their concern went beyond the relatively minor application to amend the Appeal Notice. They regarded the Appellant as advancing his case on appeal in a materially different way from that in which it had been run in the lower court.
  64. In particular, the Respondents note the new point of law raised in Ground 5 (the need for proof of the individual misfeasance of the Appellant) and the new points of fact and new approaches to the facts raised in relation to Ground 3 (the shortfall point, and the increased evidential focus on expense creditors), Ground 4 (assessment of the quantum referable to the appellant), and, more faintly perhaps, Ground 2 (solvency, with its new increased emphasis on particular facts and the surrounding context). They were less concerned with other matters, including Ground 6 (CA 2006 s 1175), which undoubtedly advanced a new point of appeal, but one where the relevant issues were closely related to those the Registrar considered in the exercise of her own discretion in making the Paragraph 75(4) order itself.
  65. Both parties cited the judgment of Lloyd LJ in the leading case of Re Southill Finance Ltd, Mullarkey v Broad [2009] EWCA Civ 2, especially at [30]-[33], here set out in full given its importance to the conduct of this appeal:
  66. "30 The authority cited by Counsel in relation to the question whether a concession should be allowed to be withdrawn is Pittalis v. Grant [1989] 1 QB 605 , in particular a passage in the judgment of Nourse LJ at page 611, as follows:
    "The stance which an appellate court should take towards a point not raised at the trial is in general well settled: Macdougall v. Knight (1889) 14 App. Cas. 194 and The Tasmania (1890) 15 App. Cas. 223. It is perhaps best stated in Ex parte Firth, In re Cowburn (1882) 19 ChD 419, 429, per Sir George Jessel M.R.:
    "the rule is that, if a point was not taken before the tribunal which hears the evidence, and evidence could have been adduced which by any possibility would prevent the point from succeeding, it cannot be taken afterwards. You are bound to take the point in the first instance, so as to enable the other party to give evidence."
    Even if the point is a pure point of law, the appellate court retains a discretion to exclude it. But where we can be confident, first, that the other party has had opportunity enough to meet it, secondly, that he has not acted to his detriment on the faith of the earlier omission to raise it and, thirdly, that he can be adequately protected in costs, our usual practice is to allow a pure point of law not raised below to be taken in this court. Otherwise, in the name of doing justice to the other party, we might, through visiting the sins of the adviser on the client, do an injustice to the party who seeks to raise it."
    31 [In] Pittalis v. Grant … [w]hat is clear is that the very issue [sought to be raised was already] before the court, that all possible evidence (as to the nature of the premises and the history of the lettings) had been adduced and that all that was to be withdrawn was a concession or admission as to the right answer to the question of law.
    32 A more recent case concerned with a similar point is Jones v. MBNA International, unreported, decided by the Court of Appeal on 30 June 2000. That was an employment case where … [on appeal, the Claimant] sought to change his ground so as to argue that the employer had been in breach of the same implied term but without alleging bad faith and rather alleging that the employer's investigation of the facts had been conducted unreasonably. The new ground of appeal required findings of fact which it was said would be consistent with or would flow from findings made by the trial judge. Not surprisingly, the Court of Appeal refused to allow this point to be taken. What matters is not so much the decision of the court, as the terms in which the judges spoke as a matter of principle. Lord Justice Peter Gibson gave the first judgment and said this at paragraph 38:
    "38. It is not in dispute that to withdraw a concession or take a point not argued in the lower court requires the leave of this court. In general the court expects each party to advance his whole case at the trial. In the interests of fairness to the other party this court should be slow to allow new points, which were available to be taken at the trial but were not taken, to be advanced for the first time in this court. That consideration is the weightier if further evidence might have been adduced at the trial, had the point been taken then, or if the decision on the point requires an evaluation of all the evidence and could be affected by the impression which the trial judge receives from seeing and hearing the witnesses. Indeed it is hard to see how, if those circumstances obtained, this court, having regard to the overriding objective of dealing with cases justly, could allow that new point to be taken."
    33 Lord Justice May put the matter more broadly:
    "51. If, as in the present case, a claim is presented at trial on the basis that it should succeed if bad faith is established, but will not succeed if it is not, it might be said that that was a forensic concession that the only basis on which the claim might succeed was if bad faith was established. We may then debate whether Mr Jones should be permitted to withdraw the concession. But I am inclined to think that this is really a case to which wider principles apply.
    52. Civil trials are conducted on the basis that the court decides the factual and legal issues which the parties bring before the court. Normally, each party should bring before the court the whole relevant case that he wishes in advance. He may choose to confine his claim or defence to some only of the theoretical ways in which the case might be put. If he does so, the court will decide the issues which are raised and normally will not decide issues which are not raised. Normally a party cannot raise in subsequent proceedings claims or issues which could and should have been raised in the first proceedings. Equally, a party cannot, in my judgment, normally seek to appeal a trial judge's decision on the basis that a claim, which could have been brought before the trial judge, but was not, would have succeeded if it had been so brought. The justice of this as a general principle is, in my view, obvious. It is not merely a matter of efficiency, expediency and cost, but of substantial justice. Parties to litigation are entitled to know where they stand. The parties are entitled, and the court requires, to know what the issues are. Upon this depends a variety of decisions, including, by the parties, what evidence to call, how much effort and money it is appropriate to invest in the case, and generally how to conduct the case; and, by the court, what case management and administrative decisions and directions to make and give, and the substantive decisions in the case itself. Litigation should be resolved once and for all, and it is not, generally speaking, just if a party who successfully contested a case advanced on one basis should be expected to face on appeal, not a challenge to the original decision, but a new case advanced on a different basis. There may be exceptional cases in which the court would not apply the general principle which I have expressed. But in my view this is not such a case."
    49 A party who seeks to advance a different case, in circumstances such as this, bears a heavy burden as regards showing that the case could not have been conducted differently, in any material respect, as regards the evidence…."
  67. The concerns expressed in these paragraphs provide a compelling rationale for favouring finality in litigation over permitting parties to have a second attempt at making out their case in the hope that their improved efforts might prove more successful. This is so even when the proposed second endeavours look promising, or the appellant's initial efforts were compromised by the arguments advanced (or not advanced) by their legal advisers.
  68. To avoid this unhappy position, it is sometimes suggested that pure points of law not raised in the lower court may be taken on appeal. However, even then the appeal court retains a discretion to exclude the new point, typically exercising that discretion when an injustice would thereby be visited on the respondent: see Pittalis v Grant (cited above); Glatt v Sinclair [2013] EWCA Civ 241, [2013] 1 WLR 3602.
  69. Glatt v Sinclair is particularly instructive in the present context. There the new point advanced on appeal was that the court had no power to order payment of post-discharge remuneration expenses and disbursements to a receiver. The analogy with the Appellant's new argument that his misfeasance must be proved individually (Ground 5) is clear. Davis LJ put the matter this way:
  70. "27 Why, then, should it be just to allow the point now to be taken by the interveners? I do not think it would be just. [Counsel] submitted that the point was not expressly conceded [before the lower court]. That may be so. But it was in reality a point which was accepted: the argument before [the lower court] could not have proceeded as it did had that not been so. Nor could leading counsel … have accepted—as he did—liability in principle for the fourth tranche of remuneration claimed if the question of jurisdiction was not accepted: his argument was simply as to quantum.
    28 Nor had the point (if available) been overlooked. [There was evidence that the specific legal question had been raised between the original parties.] …
    31 That conclusion [i.e. that it is now too late to advance this new ground of appeal on a point of law] would mean that the third ground [i.e. the need for resolution of the point of law on the appeal] falls away. However I would not, for myself, wish to rest the overall disposal of this appeal simply on that second ground [that it is now too late to advance a point of law]. Nor would I necessarily wish the interveners to think that they have failed on a procedural ground owing to the failure of … former legal advisers to take a jurisdictional point which was available to be taken. Accordingly, I turn to the third ground: which, if the interveners are right, is a point of some potential importance. I do so not simply by way of obiter remarks but as an alternative ground for my decision."
  71. Having concluded that it would be unjust to allow the new point of law to be raised, but then agreeing to determine it in any event, it was perhaps fortunate that Davis LJ then also reached the conclusion that the new point of law was against the interveners.
  72. So far as is relevant here, and starting with Ground 5 (the need for proof of the individual misfeasance of the Appellant), proceedings before the Registrar were clearly conducted on the assumption that if a misfeasance were proved then the Appellant was jointly and severally liable. However, it is also fair to say that the specific point of law now advanced appears to have been overlooked by the Appellant's earlier legal advisers in responding to the original application.
  73. Whether that should suffice appears doubtful, however. The normal rule is robust, as set out earlier: see Re Southill Finance Ltd, Mullarkey v Broad [2009] EWCA Civ 2; Jones v. MBNA International, 30 June 2000, unreported, CA. The Appellant was represented, and is himself an experienced insolvency practitioner, so it is difficult to see any deep injustice in holding him to the case he first put in the lower court.
  74. In addition, however, even if an exception might in principle be granted in these circumstances, it is fatal to such an application that the new point is one that might have impelled either party to adduce different evidence in the lower court in order to resolve the matter: see Crane v Sky In-Home Limited [2008] EWCA Civ 978, [18]-[22], Arden LJ. Of course, applications can be made to adduce new evidence on appeal, as considered in the next section, but, in the absence of that, the usual rule is clear.
  75. As to whether the other new points raised by the Appellant in this appeal would require the presentation of new evidence, the answer seems clear. Recall that the new points include the new point of law raised in Ground 5 (the need for proof of the individual misfeasance of the Appellant) and the new points of fact and new approaches to the facts in relation to: (i) Ground 3 (with the suggestion that the Registrar failed to consider properly or at all whether the loss to the expense creditors existed at all, or was in any event caused by the Bridge Administrators' breach, assessment of which requires a more focused review of the evidence of the Bridge Administration expense creditors and also of the changing circumstances subsequent to the transfer of the administration to the GT Administrators); (ii) Ground 4 (assessment of the quantum referable to the appellant, now being run as a distinct argument rather than as part of the argument on discretion); and, more faintly perhaps, (iii) Ground 2 (solvency, with its new increased emphasis on particular facts and the surrounding context).
  76. It is self-evident that all of these points, had they been raised in the lower court, would either require or entitle the parties to adduce new evidence so that the issues could be determined on appropriate facts.
  77. It thus follows that, unless permission to adduce new evidence is granted (see the next section), it would be impossible for an appeal court to deal with these new points conclusively. In addition, the role of an appeal court is limited, and all these new points do not, in my view, meet the stringent hurdles set out in the authorities above. I regard that conclusion as uncontroversial. These new points of appeal are not exotic: they might all have been taken by the Appellant in the lower court, especially given that the Appellant was represented at all times, and is indeed himself an experienced insolvency practitioner and not unfamiliar with the issues.
  78. As a matter of principle, therefore, I would be against allowing these new points to be pursued on appeal.
  79. However, although no formal application was made by the Appellant to address new grounds on appeal (as opposed to amending the Appeal Notice), it is also the case that nor have the Respondents applied to strike out any part of the Appeal Notice. Moreover, permission to appeal was granted on the papers, and those papers included all these grounds of appeal, including all the new points, uncontested by the Respondents. From that, the authorities appear to suggest that all the grounds of appeal, including all the new points, should stand: see Gover v Propertycare Ltd [2006] EWCA Civ 286, [2006] ICR 1073, [10]; Preedy v Dunne [2016] EWCA Civ 806, [45], 21 July 2016, unrep.
  80. Perhaps fortunately, this conundrum is partly resolved by the practicalities. My decision to refuse permission to adduce new evidence (see next section) effectively inhibits full resort to the new grounds of appeal, as they all require new evidence in support, and would equally need to permit new evidence to be adduced in reply by the Respondents. The appeal hearing would then inevitably turn from a review to a re-hearing, and that is only warranted in the interests of justice (CPR r.52.21(1)(b)). As Ward J observed in Ealing London Borough Council v Richardson [2005] EWCA Civ 1798, [2006] CP Rep 19, [20]: "It is, after all, firmly to be accepted that a rehearing is an exception to the general rule; that some injustice must have occurred, and simple failure to put one's case before the first court is not ordinarily to be cured by a re-hearing."
  81. Accordingly, although I address each of the grounds of appeal set out earlier, I do so within the constraints of a focus directed at determining whether the decision of the Registrar is "wrong" or "unjust because of a serious procedural or other irregularity", and make specific comments where necessary within that consideration as to the effect, in my judgement, of the point being in any sense "new".
  82. Despite all this, I also recognise that Ground 5 in particular raises an important point of legal principle and was considered by Nugee J in granting permission to appeal. Given that context, and simply for completeness, I address the legal issues in this judgment even though is not then possible for the Appellant to seek to have that law applied in the absence of robust and tested facts.
  83. 6.3 Application to adduce new evidence and related application for an adjournment

  84. Both the Appellant and the Respondents made applications to introduce fresh evidence in support of their various arguments on appeal. This new evidence could be divided into two classes. First, there were two Witness Statements, one from the Appellant (MO5), the other from the Respondents (Katz 6), each produced in 2016, well before this appeal hearing, and each addressing issues that had been raised in evidence before the lower court at the final hearing but which had perhaps become particularly material given the way matters were now being run on appeal. Both sides conceded this relatively limited new evidence could be admitted. I accepted that concession, and the appeal hearing was conducted accordingly. I perhaps should have made a formal order accordingly, as permitted by CPR r.52.21(2)(b).
  85. In addition, the Appellant sought to admit two further Witness Statements (MO 7th and MO 8th), dated eight days before the appeal hearing, and relating solely to the disputed quantum of the unpaid expense creditors (see Ground 3, although also likely to assist with certain aspects of Grounds 4 and 2). The evidence was directed at showing that some of these expense creditors were non-existent and others were owed less than the Respondents suggested. These, it was suggested, would demonstrate that the Respondents had not proved on the balance of probability in the lower court that the claimed loss, or any loss, had in fact been suffered by the expense creditors. That in turn would have the consequence that the remuneration paid to the Bridge Administrators (£835,905.10) would not, or may not, have been paid out wrongfully. This evidence would be relevant only if Grounds 1 and 2 were dismissed.
  86. In response, the Respondents advanced a counter application for permission to adduce fresh evidence in reply should the Appellant's application be granted, and accompanied that application by an oral application for an adjournment of the appeal hearing to enable them to collate the evidence.
  87. In the circumstances, it was agreed that the hearing would not be adjourned, or not immediately, that I would hear the Appellant's arguments on new evidence but would reserve judgment, and would then hear submissions from both parties on the different grounds of appeal as far as was possible without reference to any new evidence.
  88. For the reasons given below, I have decided to dismiss the Appellant's application to adduce new evidence. The Respondents' application thus falls away, as does any consequential need for an adjournment or further proceedings at a later date.
  89. The Appellant's submission is that (i) his new evidence is credible, will fundamentally affect the outcome of the case, and ought now to be admitted as fresh evidence, especially given that (ii) the Respondents are officers of the Court and subject to its control, and have a duty to act with utmost fairness; and (iii) there is a public interest issue at stake.
  90. Prior to the introduction of the CPR, a court hearing an appeal would only admit further evidence if the principles in Ladd v Marshall [1954] 1 WLR 1489, 1491 (Denning LJ) were satisfied, namely: (i) the evidence could not have been obtained with reasonable diligence for use at the trial; (ii) the evidence must be such that, if given, it would probably have an important influence on the result of the case, though it need not be decisive; and (iii) the evidence must be such as is presumably to be believed; it must be apparently credible, although it need not be incontrovertible.
  91. Since the introduction of the CPR, the Ladd v Marshall principles have been held not to provide a straitjacket, although they remain highly persuasive. The task of the court in deciding whether to admit new evidence is to strike a fair balance between the need for concluded litigation to be determinative of disputes and the desirability that the judicial process should achieve the right result: Hamilton v Al Fayed (No 2) [2001] EMLR 15, [11]; Singh v Habib [2011] EWCA Civ 599, [14]. The principles on which this discretion ought to be exercised are not spelt out.
  92. Assuming that the Appellant's proposed new evidence is both credible and likely to have an impact on the outcome of the case, as is still required, the more difficult issue is the less straightjacketed balancing now required since the introduction of the CPR between the need for concluded litigation to be determinative and the desirability to achieve the right result. Ladd v Marshall (above) favoured the former over the latter unless the new evidence could not have been obtained with reasonable diligence for use at the trial. That test did not demand impossibility, since both context and costs were relevant factors. The Appellant could not credibly argue that this rather strict Ladd v Marshall test is met here.
  93. These Ladd v Marshall principles remain relevant, despite not providing a straightjacket. As noted obiter by Wilson SCJ in Gohil v Gohil (No 2) [2015] UKSC 61, at [31], the Ladd v Marshall principle "severely curtails a litigant's enjoyment of a second opportunity to adduce evidence" (omitting the emphasis in the original). Given the Appellant's long-standing experience as an insolvency practitioner and his knowledge of the context in which such claims for misuse of company funds are advanced, the need for this evidence ought to have been obvious to him, and certainly to his legal advisers. In these circumstances, even post-CPR, the need for finality in litigation appears to win over the desirability of allowing any second attempts to pursue the right result.
  94. In an endeavour to overcome that likely preliminary conclusion, the Appellant, through his counsel, argued that, as officers of the court, it was the Respondents' responsibility to test the evidence properly before presenting it to the court, and the Appellant should not be penalised for having accepted their submissions as accurate. Given this, the Appellant further argued that not to admit this new evidence would be contrary to the public interest as it would permit the Respondents to enforce their legal rights under the judgment to the full amount, thus enriching the estate, and condoning unfair conduct on the part of the Respondents as officers of the court. Furthermore, it would impose upon the Appellant an obligation to pay a substantial sum of money even though that sum was not representative of any loss actually suffered by the expense creditors.
  95. My earlier preliminary conclusion against allowing fresh evidence is unaffected by the fact that the Respondents are officers of the court. I was given no authorities suggesting the Respondents were responsible for testing the evidence themselves, or that they should not act in a way that would penalise the Appellant for failing to do so. The Appellant placed reliance on the well-known case of In re Condon; ex p James (1874) LR 9 ChApp 609, usually cited for the principle that officers of the court owe a duty not to act dishonourably or unfairly in enforcing their strict legal rights. Accordingly, "for the principle to apply, there must be dishonourable behaviour or a threat of dishonourable behaviour on the part of the relevant court officer, by taking an unfair advantage of someone": In Re T. H. Knitwear (Wholesale) Ltd. [1988] Ch. 275, 290 (Slade LJ). Less pejoratively, later cases refer to the behaviour only as needing to be "unfair".
  96. Thus in In Re Clark (A Bankrupt), ex parte The Trustee v Texaco Ltd [1975] 1 WLR 559, Walton J applied the rule to restrain a trustee from taking proceedings to recover sums paid to a third party even though the trustee was entitled to do so, saying: "[T]he rule provides that where it would be unfair for a trustee to take full advantage of his legal rights as such, the court will order him not to do so." See too Re Nortel GmbH [2013] UKSC 52, [22] (Lord Neuberger) (although in that case the rule did not trounce the statutory scheme of ranking that the court was considering); and Re Lehman Brothers International (Europe) (In Administration) [2015] EWHC 2270 (Ch), especially [174]-[183] (David Richards J).
  97. There is no analogy between those cases and the facts here, where the "unfairness", if any, is that a properly brought claim by liquidators against a prior administrator has found that the administrator conducted himself improperly in a manner rendering him liable to the company. In truth, the argument being put here is that the decision reached by the Registrar is wrong, and because it is wrong its enforcement would result in a windfall to the company, and so the Respondents should not be allowed to insist on that windfall. That assertion does not require any application of the rule in ex p James.
  98. The Appellant further argued that it would be contrary to the public interest not to allow this new evidence to be presented. Such a finding was made in Singh v Habib [2011] EWCA Civ 599, [15], although in circumstances where the Ladd v Marshall tests were all held to be met (a conclusion that is not open here), and the public interest, although not spelled out, might be seen as the public interest in ensuring that fraudulent insurance claims were not successful, with the result that insurance costs for all would rise.
  99. Finally, the authorities indicate that, if the reception of fresh evidence would lead to a re-trial, this should only be allowed if "imperative in the interests of justice": Transview Properties Ltd v City Site Properties Ltd [2009] EWCA Civ 1255, [23].
  100. I do not consider those tests met on these facts, and prefer in this context the approach in Hertfordshire Investments Ltd v. Bubb [2000] 1 WLR 2318, at 2324C, per Hale LJ: "It is in the interests of every litigant and the system as a whole that there should be an end to litigation. People should put their full case before the court at trial and should not be allowed to have a second bite at the cherry without a very good reason indeed." What is lacking in the Appellant's case is any evidence of good reasons for his inability to present this evidence earlier.
  101. Accordingly, I refuse to grant the Appellant's application to adduce fresh evidence. As noted above, the consequence is that the Respondents' application to adduce fresh evidence in reply thus falls away, as does any consequential need for an adjournment or further proceedings at a later date.
  102. 6.3 The "Quistclose point"

  103. There is one further matter to record. At the start of the second day of the appeal hearing, I requested assistance from the Appellant's counsel on the authorities that would support her assertion that payments under the Deed were "the Administrator's property". In the short time available, that assistance could not be provided. On 27 July, just over a week after the two-day hearing of the appeal, I wrote to counsel for both parties in the following terms:
  104. "I am writing to raise a query with you both. On the second day of the recent hearing of this application before me in the Rolls Building (19/07/17), I asked for some help on the issue of the construction of the Deed, and in particular the issue of whether the payments under the Deed were intended to be 'the administrators' property', at least so far as they concerned remuneration, (as argued by the Applicant) or whether they would automatically become 'the company's property' (as argued by the Respondent, who advanced in argument that the contrary could not be achieved by one Deed providing for two uses of the funds – remuneration and expenses – with the funds paid to the company). Neither of you provided relevant authorities for these contrasting views.
    I am minded to refer in my judgment to the approach taken in the Quistclose line of cases, including Quistclose itself ([1970] AC 567), and Carreras Rothmans ([1985] Ch. 207), Guardian Ocean Cargoes ([1994] 2 Lloyd's Rep. 152; [1994] C.L.C. 243) and Twinsectra Ltd v Yardley ([2002] UKHL 12, [2002] 2 AC 164), but would welcome any very short submissions from each of you if you wished. If you do wish to comment, may I have your input by close of business on Friday 11th August 2017."

    Counsel for each side provided extremely helpful written submissions.

  105. Counsel for the Respondents also requested an opportunity to make oral submissions. Those were heard at a half day hearing on 30 November 2017 (the first available date for all concerned). The Appellant appeared in person. He had indicated earlier that he did not wish to make oral submissions. However, on the day he chose to make some comments on particular points, and expressed himself content that he had been properly heard.
  106. The issues addressed in written submissions and the half day hearing are considered below in Section 7.1 on the construction of the Deed.
  107. 7. Determination of the grounds of appeal

    7.1 Construction of the Deed and related consequences

  108. I approach this matter rather differently from the Registrar, and therefore come to different conclusions. I appreciate that I have had the advantage of more detailed arguments put to me by counsel (including different counsel for the Appellant) and greater time for oral submissions.
  109. It is unquestionably the law that administrators must apply the company's assets in accordance with the priority rules set out in IR 1986 r.2.67(1), which require administration expense creditors to be paid before the administrators' remuneration. It is not possible to contract out of this statutory scheme: British Eagle International Airlines Ltd v Compagnie Nationale Air France [1975] 1 WLR 758, 780-781; Belmont Park Investments Pty Ltd v BNY Corporate Trustee Services Ltd [2012] 1 AC 383, [6]-[15].
  110. However, that limitation applies only to the company's assets. It does not prohibit white knights or late investors providing additional funds on terms, including terms that compel the purchase of new assets and give those funders first priority purchase money security interests over those assets, or terms that operate by way of Quistclose trust requiring funds to be used only for nominated purposes and not to be at the free disposal of the company (Barclays Bank Ltd v Quistclose Investments Ltd [1968] UKHL 4; Twinsectra Ltd v Yardley [2002] UKHL 12). This does not offend the insolvency rules.
  111. Moreover, the nominated purposes may include the preferential payment of particular debts notwithstanding that, absent the third party injection of funds, the payment of these debts out of company funds would have breached the insolvency priority rules. The rationale is that the position of unsecured creditors is unaffected; the only change is that one original unsecured debt has been replaced by another. It follows from this rationale that the only qualification on this rule is that the injection of third party funds must be an injection of new funds into the company coffers. It cannot be by way of an injection of funds which pays off a debt already owed by the white knight to the company: that would breach the insolvency priority rules because it would use company assets (the company' claim against the third party, and the receipts delivered by its payment) to prefer one unsecured creditor (the creditor nominated by the third party). This was the gist of Carreras Rothmans Ltd v Freeman Mathews Treasure Ltd [1985] Ch 207, Peter Gibson J, esp at 226G (prior to liquidation) and 228G-229B (post liquidation, notwithstanding the agreement had been made prior to liquidation). That final timing issue is true of all agreements of this latter type that attempt to alter the insolvency priority, whether merely by contract or via a trust: they may have effect prior to the liquidation, but not after (as held in British Eagle itself in respect of the contractual arrangements, and as held in Carreras Rothmans in respect of the trust arrangements).
  112. The principles underpinning Quistclose trusts themselves are not in dispute, and I do not need to elaborate them here. See the cases already cited and also Briggs LJ in Bellis v Challinor [2015] EWCA Civ 59 at [56]-[57].
  113. It follows from the above considerations that if the indemnity facility set out in the Deed is of that permitted form, then it is not illegal or improper and its terms can be enforced. Furthermore, it is not improper or dishonourable for the administrators to enter into it. Indeed it may be the sole means of rescuing the company and permitting its continued trading during the rescue process. From this it follows that I do not accept the Respondents' arguments that, legally, such arrangements for a preferential payment by TAA of the Bridge Administrators' remuneration can only be effected by means of separate bilateral contractual arrangements between TAA and the Bridge Administrators, with funds paid into the personal accounts of the administrators.
  114. Given the law as just set out, my starting point is that the Bridge Administrators could have agreed to act on terms that their remuneration was paid by third parties rather than out of company funds. The issue is then whether they have achieved that objective by means of the Deed used here.
  115. The rules of contractual interpretation are not in dispute. See Pink Floyd Music Ltd v EMI Records Ltd [2010] EWCA Civ 1429, [2011] 1 WLR 770, [17]-[18]; Investors Compensation Scheme Ltd v West Bromwich Building Society [1997] UKHL 28, [1998] 1 WLR 896, 912F-913G; Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38, [2009] 1 AC 1101, [21]-[26].
  116. The Deed that has to be interpreted was drafted by lawyers and signed by experienced insolvency practitioners and a substantial and experienced corporate investor (the Bridge Administrators and TAA respectively). It was agreed in circumstances where MKA had been trading with very substantial losses prior to administration (even at the end of the Bridge Administration, these losses were of the order of US$1 million per day) and where TAA nevertheless wanted to ensure MKA would recommence trading and eventually be put in a position where it would survive as a going concern so that TAA could benefit from its AOC. In such circumstances, most administrators would endeavour to secure alternative means for payment of their remuneration, given the evident risk that they would receive nothing from the trading receipts of MKA after application of the administration priority rules. In the normal course of events, the effect of TAA paying the Bridge Administrators' remuneration and disbursements would have been to subrogate TAA to the Bridge Administrators' rights under IR.2.67. However, the Deed (Clause 8) included a subordination clause, further reducing TAA's position as a creditor, and no doubt intended to assist in obtaining agreement of the necessary CVA if MKA was to exit administration successfully.
  117. The following context is material to the construction of the agreement so far as it concerns MKA (and I omit details in the Deed dealing only with other companies in the MK group):
  118. i) The Recitals (which by Clause 1.2.1 are to "be effective to the same extent as if they had been set out in the body of the Deed") provide that TAA has agreed to indemnify "the Administrators" to enable them to take steps to preserve the value of the MK group of companies, including MKA, and thereby facilitate the re-commencement of trading of the business. (Recital (B)). In consideration of that indemnity, MK Investments agreed to transfer the issued share capital in MKA to TAA for US$1 (Recital (C)).

    ii) The various companies in the MK group of companies are parties to the Deed for the purposes of acknowledging its indemnity terms and agreeing to certain specified sales of assets (Recital (D)). This has the legal consequence that none of these companies can later deny that they received the Facility money on the specified terms.

    iii) Signatures on the Deed: the Respondents made much of the fact that the Administrators are listed as parties "in their capacity as joint administrators" of the MK group of companies. However, this does no more than limit the indemnity to their operation in that role. If they were parties only by way of their function as joint administrators of the relevant companies, then it is rather odd that the signatories to the agreement are not only all the companies in the MK group (signed by one administrator for and on behalf of each of those companies), but also each of the Bridge Administrators signing individually "as Administrator".

    iv) The definition of "Administration Expenses" (Clause 1.1) adopts the IR 1986 r.2.67(1) definitions but expressly notes that the priority in payment of such expenses is as altered by the terms of the Deed in Clause 3.2.1 (set out below).

    v) The indemnity is capped at US$18 million, but is limited to the excess of the indemnified liabilities over and above the trading receipts of MKA relating to the indemnity period, but not before, which are recovered by or paid to the Administrators and available to meet the said liabilities, and also the value of any other indemnities (including after the event) received during the indemnity period by the Administrators or by the companies from other parties and upon which the Administrators are entitled to rely in priority to or in conjunction with the indemnities under this Deed (but excluding the Administrators' bond and professional indemnity policy) (Clause 7). This provision is in complete accord with the objective of holding harmless the Administrators so far as their remuneration is concerned, and providing sufficient sums to give them the best possible chance of reviving the failing company.

    vi) Clause 8.1 is a ranking and subordination clause, but clearly sets out the purpose of the arrangement: "[TAA] acknowledges and agrees that notwithstanding that Advances made under this Deed are made with the purpose of facilitating the recommencement and continued trading of the [MK group of companies] by the Administrators, no funds advanced by [TAA] under this Deed shall constitute or be deemed an Administration Expense and [TAA] further acknowledges and agrees that all Advances (excluding the Deposit [dealt with separately]) shall be subordinated to and rank for payment entirely behind all claims of other creditors of the [MK group of companies], whether unsecured, preferential or secured." This contradicts completely the suggestion that the Indemnity sum is by way of purchase price for the shares or for the company assets. Those are already acquired for a nominal sum. The Indemnity is a subordinated loan granted for the very specific purpose of attempting to resuscitate a group of failing companies, with the trading entity, MKA, and its AOC, being the prime target.

    vii) The Administrators undertake certain obligations to TAA during the indemnity period (Clause 4) but not so as to "fetter the Administrators' discretion to act in accordance with their duties and obligations as administrators and officers of the Court and in accordance with usual insolvency practice" (Clause 5.1). This clause, too, is in complete accord with ensuring that a third party funder paying the administrators' remuneration cannot thereby be regarded as likely to be able to interfere unduly in the performance of the administrators' functions.

    viii) Clause 3 sets out TAA's obligations. Its material parts need to be set out in full, and are as follows:

    "3.1 In consideration of the Administrators agreeing to enter into, and fulfilling their obligations under, this Deed and subject to the limits as set out in clause 7 below [the indemnity cap], [TAA] undertakes to pay to the Administrators all Administration Expenses incurred by the Administrators in performance of their duties as administrators of the [MK group of companies] during the Indemnity period including (without limitation) the Administrators properly incurred professional fees and expenses.
    3.2 [TAA] further acknowledges that:
    3.2.1 [payments to ransom creditors];
    3.2.2 [payments to employees and essential overheads, etc] "which, whether such liabilities arose prior to or following the appointment of the Administrators, shall be treated as Administration Expenses indemnified under this Deed." [Note that such a provision is perfectly proper given my earlier interpretation of both the relevant law and the particular objectives of this Deed.]
    3.3 The Administration Expenses referred to in clause 3.1 and 3.2 shall be payable in the following order of priority:
    3.3.1 the Administrators' remuneration and all disbursements payable in respect of their professional advisers' and/or agents' fees and expenses, which shall be indemnified as first ranking expenses under this Deed; and
    3.3.2 subject clause 3.3.1 [sic], all other Administration Expenses in accordance with the order of priority set out in rule 2.67(1) of the Insolvency Rules 1986 (as amended). …
    3.7 The undertaking as to costs set out in clauses 3.1 and 3.2 above shall also include the Administrators legal costs of the negotiation, preparation and execution of this deed. … [And I query whether any part of this might include the Salans pre-administration expenses, but nothing was made of this by either of the parties.]"
  119. With that detail set out, it is now possible to consider the proper construction of the Deed and the legal consequences that follow for the Bridge Administrators' use of the Facility.
  120. The Respondents maintained the arguments they had successfully advanced before the Registrar. In particular, they urged the interpretation of the Deed put forward by Mr Katz (one of the Respondents) in his first witness statement (8 July 2014, at para 13): "TAA also agreed, amongst other things to provide funding of US$18 million (the "Facility") so that MKA could trade during the period of administration. A Deed of Indemnity dated 20 June 2008 (the "Deed") was entered into with MKA to provide MKA with the Facility to enable it to continue to trade so that it could, after certain regulatory approval and creditor compromise, be sold to TAA for a nominal amount. The Facility was therefore, in effect, a purchase price for the MK Group."
  121. On its face, this interpretation appears at odds with the technical and practical detail of the Deed, which does not provide for a sale of assets by MKA, but provides for the sale by MKA's sole shareholder of its shares in MKA for US$1. The vendor in this sale is hardly advantaged by the subsequent injection of $18 million into the funds of MKA. Moreover, since it was anticipated that the Facility would only cover Bridge Administration expense creditors and administrators' remuneration, and MKA's then-existing creditors would be subjected to a rather punishing CVA, the Facility was also of no substantial benefit to those with then-existing interests in MKA. However, what is achieved by the injection of up to US$18 million is the possibility that MKA will be enabled, if the Administrators are successful, to remain a going concern, which is what the purchaser, TAA, desired in order to acquire the benefit of MKA's AOC. Moreover, the terms of the Deed specify that the Facility is repayable as a subordinated loan, which again goes against the interpretation that the US$18 million is part of some purchase price. Finally, as explained earlier, it is legally possible for TAA to arrange for that post-administration injection of funds to MKA to be on terms that the funds are used for specific purposes outside the insolvency rules priorities.
  122. For all these reasons, and given the express terms of the Deed, I find that the Deed was intended to provide a Facility that would, as its first priority, indemnify the Bridge Administrators' claims for remuneration and disbursements, and I further find that it was not improper or illegal to endeavour to make such arrangements. In her finding to the contrary on both those matters, I regard the Registrar's conclusions as wrong in law on the construction of the Deed and also on the interpretation of the necessary consequences of the IR 1986 r.2.67 priority rules so far as they might apply to third party injections of funds into the administration.
  123. The Respondents' response is that none of this matters, since it is an uncontested fact that the funds paid by way of remuneration were funds paid from MKA's bank accounts. These were legally MKA's funds. As a consequence they could only be used in accordance with the administration priority rules, thus requiring the Bridge Administrators to be paid after the Administration expense creditors. This conclusion, the Respondents suggested, follows regardless of whether the remuneration funds came from a separate account into which no TAA monies had been paid, or whether they came from an account containing an unsegregated mixture of MKA funds and TAA-injected funds: on mixing, such funds became, legally, MKA's.
  124. Much of this is correct. It is without question the case that MKA has legal title to the monies in its accounts. It is also true that if monies that belonged to TAA were somehow paid into MKA's account, TAA would lose its legal title to those monies now in MKA's bank account (monies in all these contexts being shorthand for the relevant choses in action against the bank). All those conclusions relate to legal title. They are not contested. It is also true that company monies cannot be used contrary to the administration priority rules. But in this context the reference is not to monies that belong legally to the company, but to monies that are beneficially the company's. This is the principle explaining all the legitimate preferences given to claimants with trust or security interests. I thus find that the Registrar was wrong in law to accept the Respondents' first argument that it was not even necessary to construct the Deed, simply because the remuneration monies had been paid out of company accounts.
  125. Furthermore, breach of the administration priority rules does not follow automatically merely from proof that the administrators' remuneration was paid out of monies that belonged beneficially to the company. Were it so, every perfectly legitimate payment of administrators' remuneration from the company's funds in accordance with the priority rules would be caught. What is required by way of proof of misfeasance is that there is a shortfall to the administration expense creditors caused by the premature payment of the administrators' remuneration out of company funds.
  126. Given the construction of the Deed adopted earlier in this judgment, the legal analysis of the facts would then appear to be as follows. The injection of up to US$18 million into MKA's coffers is made on the basis that it will be used specifically to pay certain debts and expenses. It is not money at the free disposal of MKA: it was paid to MKA subject to certain conditions to which MKA itself agreed by signing the Deed. Given those conditions, which are permitted by law, it then follows that if any sums within that US$18 million envelope are paid out to the Bridge Administrators by way of remuneration, it is impossible to suggest that there is a shortfall in payment of the administration expense creditors caused by the premature payment of the administrators' remuneration. As a matter of practicalities, the precise source of the remuneration payments is not the matter in issue. What is in issue is the resulting impact on the expense creditors.
  127. This was the essence of the argument put by the Appellant, the shorthand for which was that this injection of TAA funds was "the Bridge Administrators' money, not the Company's money". They bolstered this argument by referring to the normal subrogation consequences that would follow where an external funder agrees to pay one of the company's creditors (here the Bridge Administrators), and is then subrogated to that creditor's claim against the company, with no net impact on any other creditor, including, here, the expense creditors (although, on the facts here, they too are significantly advantaged by the substantial injection of funds by TAA). I accept the force of these arguments. As already noted, the Deed itself subordinates TAA's automatic subrogation claim.
  128. If all that seems to leave too much at the discretion of the Bridge Administrators in extracting enormous sums by way of remuneration, that further issue is properly resolved by alleging breaches of other duties owed by company administrators, not by alleging breach of the administration priority rules. On the facts before me, the Bridge Administrators have a short answer to any alternative allegations: their remuneration was approved by the creditors, and thus it would require a great deal more to prove a breach on this front.
  129. The Respondents do not accept my construction of the Deed. Even adopting that construction, however, they suggest that the ends desired cannot be achieved other than by trust, whether that trust is express, resulting or constructive, and furthermore it must be a trust in favour of the Bridge Administrators. There is evidence of a similar conclusion in the Registrar's judgment, where she too comments that no trust exists on the facts before her. I reject this interpretation of the law for the reasons already given. It appears to return to the argument that all funds that are beneficially the company's must be dealt with in accordance with the administration priority rules, and denies consideration of the potential effect of any third party injection of funds into the administration, and in particular the terms on which such injections of funds may have been made.
  130. This focus on identifying a relevant trust was repeated in the Respondents' arguments on the Quistclose point. The Respondents regarded such a trust as inconsistent with their interpretation of the Deed (but I have rejected that interpretation), and furthermore pointed out that if such a trust existed, then on the authorities as they currently stand that trust would necessarily be a resulting trust for the benefit of TAA. That conclusion, they suggested, was completely contrary to the intentions of any party, and would have the worrying consequence of possibly rendering the conduct of the subsequent administrators and liquidators as conduct in breach of the terms of that trust.
  131. I do not accept this. It is true that the modern authorities on Quistclose trusts, in particular the analysis of Lord Millett in Twinsectra Ltd v Yardley [2002] UKHL 12, regard the trust in issue as a resulting trust in favour of the third party funder, with a power in the fund-recipient to use the funds for the nominated purposes. If those purposes are pursued according to their terms, the funds will be dispersed, the resulting trust will necessarily collapse (there will be no assets covered by it), and the third party funder will simply be a creditor with a claim to repayment of the loan that had been provided for specific purposes. Note the point that use of the funds in accordance with the conditions on which they were provided will not be in breach of any trust.
  132. The issue in these well-known Quistclose cases is typically, first, whether the arrangements in issue were indeed such as to create a Quistclose trust, and, secondly, whether a claim can be pursued by the third party funder to recover the identifiable but unused funds still held under that trust. That second issue is not relevant here. On the other hand, I regarded these authorities as potentially important in bolstering the Appellant's claim that the TAA funds were "the Bridge Administrators' money, not the Company's money", hence my request for further submissions on the point.
  133. My intention in making that request was merely to confirm the terms on which MKA and the Bridge Administrators must be taken to have received those funds. If the funds were then used for the specified purposes (and there is no indication that they were not), then there is no cause for TAA to be claiming as against MKA that MKA holds funds to which TAA is beneficially entitled.
  134. If the TAA indemnity funds had been specifically identifiable and segregated, then, given my interpretation of the Deed, they would without question have been the subject of a Quistclose trust, arising because all relevant parties were fully aware that any funds paid by TAA to MKA were not intended to be at the free disposal of MKA, but were intended to be used according to the specific terms of the indemnity facility and not for other purposes. In other words, they were not beneficially the company's monies.
  135. The Respondents suggest that such an approach, and in particular the finding of a resulting trust in favour of TAA, is unworkable in practice and contrary to the intentions of the parties. I do not accept that. I use an example by way of illustration. Suppose that TAA had been persuaded to pay the entire US$18 m facility to MKA immediately, and then for some reason the Bridge Administration had collapsed before any work commenced. In those circumstances I regard it as uncontroversial that a court would find that any identifiable funds would have to be returned to TAA, since none of the intended uses of them would then be possible; the funds would not be regarded as an unconditional addition to the company's funds available for distribution to the company's unsecured creditors on a liquidation. This is the protective point of a Quistclose trust. If that is accepted, then I suggest it follows automatically that the Bridge Administrators' use of the TAA funds according to the specific purposes for which they were given (including preferential payment of remuneration) cannot be a misfeasance in the use of funds belonging beneficially to the company contrary to the statutory priorities.
  136. Finally, the Respondents point out that in these Quistclose cases the funds provided by the third party are typically segregated in a separate account to be used for the agreed purposes. Here, the funds were mixed. I accept that fact. Were TAA attempting to recover its funds, that would be a significant impediment. Here, however, the problem is far simpler. Funds designated to be used for specific purposes have been mixed with funds able to be used for other purposes. Putting the Respondents' case at its highest, the Bridge Administrators have used those mixed funds to pay their own remuneration in priority to the expense creditors. If the question of misfeasance turned on whether the funds used were company property or not, the mixing might be relevant. But that is not the law, as explained earlier. There is only a misfeasance if the use of company funds to pay the administrators' remuneration causes a loss to the expense creditors. Where funds dedicated to the purpose of paying remuneration have been mixed with the general funds, and the remuneration then paid out of these mixed funds, the result is not to cause a loss to the expense creditors that they would not otherwise have suffered. Accordingly, there can be no misfeasance. I might put this another way. All the parties accept that there has been no misfeasance if the company is solvent. Equally, there is no misfeasance if the net position is as it would have been if some segregated account had been used to pay remuneration first. I might cite in support various trust cases, including AIB Group (UK) plc v Mark Redler & Co Solicitors [2014] UKSC 58, although these cases were not cited to me in court and I do not regard them as necessary to make the point being made here.
  137. The short point is this. If the Administrators' remuneration could have been paid out of the US$18 million TAA Facility, had it been segregated, and no creditor could then have complained (as accepted by the Respondents), then logic suggests that the same result should obtain if the US$18 million, specified to be dedicated to those purposes, is simply added to the aggregate funds of the company, and the administration expenses paid out of that aggregated fund. The net position of the company is the same in each case. The intention of TAA is the same in each case, and known to all the affected parties. So in each case, not simply the first, the Respondents should not be able to claim to have suffered a loss by way of misfeasance by the Bridge Administrators or the Appellant.
  138. Accordingly, on the construction of the Deed, and the consequences of that construction for the use of the TAA funds, I find that the conclusions reached by the Registrar were wrong in law. I repeat, that in reaching this conclusion I have had the advantage of significantly more detailed submissions than she had. Nevertheless, the outcome is that the Appellant succeeds on this ground of appeal.
  139. The consequence of this particular finding in favour of the Appellant is that I accept his construction of the Deed is correct. It therefore follows, as both parties accept, that there has been no misfeasance by the Bridge Administrators, and thus by the Appellant, in utilising the benefit of those funds to pay their remuneration out of MKA accounts in advance of paying the expense creditors. To the extent that the Derrett Order refers to remuneration, it cannot stand.
  140. That renders determination of the Appellant's other grounds of appeal, so far as they relate to remuneration, unnecessary, and leaves only the arguments relating to the Salans payments. However, given the time and attention dedicated to these further arguments before me, I consider them all here, even though in my view they cannot change the outcome for the Appellant so far as it concerns the remuneration point.
  141. 7.2 Solvency

  142. The Registrar held that if the Bridge Administration had been solvent at the time it was transferred to the GT Administrators, then there could have been no misfeasance. That is uncontroversial. However, she found on the facts that MKA was insolvent at the time of transfer, and from that appears to have concluded that there was inevitably a misfeasance by the Bridge Administrators, and thus by the Appellant.
  143. The Appellant challenges this finding on two principal grounds. First, that the finding displays serious procedural irregularities in that the Registrar gave no reasons for her findings of fact, and in particular favoured the Respondents' evidence "on the balance of probability" rather than because some defect had been found in the evidence that rendered it less credible. Secondly, the Appellant argues that the Registrar's conclusion is, on the face of it, "wrong" in fact, in that the Registrar (i) adopted the Respondents' evidence (in Mr Katz's various witness statements) as to valuations of assets, even when those figures sometimes represented break-up valuations achieved on liquidation sales rather than estimates made earlier at the time the Bridge Administration ended and while MKA was operating as a going concern (in the Appellant's Estimated Outcomes Statement ("EOS")); (ii) the Registrar ignored or discounted certain assets available to MKA at the time of the transfer to the Bridge Administrators, and did so without due explanation or justification, including in particular the outstanding sums due under the Facility (being sums which were subsequently paid, notwithstanding that at the time of the transfer they were in dispute) and additional loans and guarantees said by the Appellant to be available to MKA and thus constituting part of its assets; and (iii) perhaps less strongly pushed in this solvency context, the Registrar misconceived the basis of establishing a misfeasance by way of breach of the IR 1986 r.2.67 priorities, and, for example, ignored the fact that MKA went out of administration and traded as a solvent company after the GT Administration (although the particular issues are raised specifically in Ground 3, considered in the next section).
  144. The hurdle required to be met by the Appellant in order to succeed in advancing either of the arguments is exceedingly high: see above, para 40. Tanfern Ltd v Cameron-MacDonald [2000] 1 WLR 1311, at [33], indicates that an argument based on procedural irregularity will only succeed where the defect in the lower court is a serious one and caused the decision of the lower court to be an unjust decision. Weymont v Place [2015] EWCA Civ 289 is a rare case where an appeal based on shortcomings in findings of fact in the lower court was allowed and a re-trial ordered because no adequate reasons for reaching factual conclusions had been given.
  145. In this case, all the evidence needing to be assessed by the lower court was in documents before the court. The Registrar indicated that the true financial position of MKA at the relevant time was uncertain, as accepted by both parties, but identified those aspects she especially doubted (including various aspects of assets listed in the Appellant's EOS). While the reasons for her choices were not detailed, the various factual components she took into consideration and how she regarded them are both clear. Accordingly, I do not think it can be said that she gave no reasons, or that the lack of detail in her reasoning prevents the Appellant mounting an appeal (as evidenced by this judgment). No oral evidence was presented, and the written evidence was not tested by cross-examination, so the Registrar was forced to deal with conflicting evidence on the papers alone, and chose, as she said, on the balance of probabilities, which she found more compelling. I am not sure what else she could have done, and do not regard an appeal on the grounds of procedural irregularities in relation to the Registrar's findings on solvency as made out.
  146. The Appellant's second argument was that the Registrar's decision was "wrong" on the facts. Here, too, the hurdle is high. See earlier at para 40, citing from Henderson v Foxworth Investments Ltd [2014] UKSC 41, [2014] 1 WLR 2600 at [66]-[67], where Lord Reed SCJ noted that an appeal court needs to be satisfied that the lower court decision is "plainly wrong" in the sense that it could not reasonably be explained or justified and so was one which no reasonable judge could have reached. If the appeal court was not satisfied that the decision came within that category, it was irrelevant that, with whatever degree of certainty, it considered that it would have reached a different conclusion from the trial judge. To the same effect, see Weymont v Place [2015] EWCA Civ 289, [1] (Patten LJ); Re B (a Child) [2013] UKSC 33, [52]-[53].
  147. Applying that test in the context of the present appeal, especially given the acknowledged uncertainty by both parties as to the true position on solvency (see the Registrar's judgment at para [38]), it would seem impossible to say that the Registrar's decision that MKA was insolvent at the relevant time is one which no reasonable judge could have reached. On that basis, the Appellant's appeal against the Registrar's finding on solvency must fail.
  148. In that context, however, a number of points of principle rather than criticisms of findings of individual fact might be made by way of comment on the approach taken by the lower court in analysing the admittedly uncertain evidence.
  149. i) First, when the Bridge Administrators were appointed, MKA was insolvent. The Administrators' obligations required them to pay the Bridge Administration expense creditors ahead of their own remuneration payments, if payments were being made out of company funds. But they might quite properly do exactly that, and then pay their remuneration, leaving the company still insolvent. It follows that the mere fact of insolvency does not prove a misfeasance, even though the contrary – MKA's solvency – would prove an absence of misfeasance. There is no evidence that this point was taken before the Registrar, although it is now taken in Ground 3.

    ii) Secondly, what matters in proving a misfeasance is not the balance of assets and liabilities for MKA as a whole, but the balance of assets able to be dedicated specifically to paying expense creditors assessed against expense creditor liabilities: i.e. it is the net position of the expense creditors that is crucial, and that is not necessarily the same as the net position of MKA as a whole, especially assuming MKA was not solvent when the administrators were put in place. In this administration, some of the assets belonging to MKA were dedicated to the expense creditors, not merely to reducing the general debt carried by MKA. See, for example, the personal undertaking by Dr Alanizi, noted as such by the Registrar ([41]). The Registrar's treatment of the CAA Guarantee (at [42]) and the outstanding Facility payments (at [43) is less clear. However, because the Registrar assumed both that "solvency means no misfeasance" and equally that "insolvency means misfeasance", she had no reason to examine these particularly closely or match them against specific expense creditor liabilities. The Appellant now raises this specific issue in Ground 3, below.

    iii) Thirdly, the Bridge Administrators' potential misfeasance in paying out remuneration in advance of paying expense creditors must be assessed at the date of their discharge. That is the date at which the balance of MKA assets and expense creditor liabilities must be assessed. If, after that date, the assets dedicated to that purpose (i.e. the assets subject to the Bridge Para 99 Charge) fall in value, so that there is a payment shortfall to those secured by the charge, it does not automatically follow that the shortfall is caused by the Bridge Administrators' misfeasance. If their initial valuation at the date of their discharge is wrong, then that may reveal a real misfeasance of course. But, absent that, the cause of the reduction in value will need investigating, and it would seem inappropriate to assume its cause is some misfeasance by the Bridge Administrators, much less a misfeasance by way of payment of remuneration. The Appellant now makes this point indirectly in Ground 3 in complaining that the Registrar preferred the Respondents' valuations, even though in some cases they were subsequent breakup valuations rather than the going concern valuations presented by the Appellant in his EOS.

    iv) Finally, given that the Registrar recognised that "solvency means no misfeasance" at the date of the transfer of the Bridge Administration to the GT Administrators, it perhaps merits comment that she appears not to have been asked to consider whether the same conclusion of "no misfeasance" is equally warranted in respect of both groups of administrators when the GT Administration ended and the company was returned to independent management by its directors as a solvent enterprise.

  150. If these matters of principle are compelling, and if they had been taken into account, it is possible (depending on the facts) that they may have affected the outcome of the decision on MKA's solvency at the date of transfer of the Bridge Administration. However, neither the Registrar's judgment nor Appellant counsel's skeleton for the final hearing suggest that these matters were put to the Registrar in this way by the Appellant, and in any event it is a significant step beyond that to suggest that an experienced Registrar misunderstood the evidence before her to such an extent that her findings were "plainly wrong", or findings that "no reasonable judge could, in the circumstances, have made", and I decline to so hold: see Weymont v Place [2015] EWCA Civ 289, [1] (Patten LJ); and the authorities cited earlier.
  151. Finally, and for the sake of completeness, I add here (although it was raised in various contexts) that a further argument was put by the Appellant to the effect that the Registrar's finding that the claim of the GT Administrators to be subrogated to the Bridge Para 99 Charge by virtue of having paid some of the Bridge Administration expense creditors themselves was contrary to the weight of the evidence and wrong in law. Had the Registrar found in favour of the Appellant on this point, the shortfall said by the Respondents to exist, and accepted by the Registrar to exist, would have been reduced by £1,925,623.32, a sum significant enough to affect the conclusions on solvency and thus on misfeasance.
  152. The point of law appears uncontroversial. When the Bridge Administrators were discharged, the Bridge Para 99 Charge arose. The claims of the unpaid Bridge Administration expense creditors were the first debts secured by that charge (with claims to be paid out according to the IR 1986 r.2.67 priorities): see Re MK Airlines Ltd (in liq) [2012] EWHC 1018 (Ch). If the GT Administrators paid these Bridge Administration expense creditors out of their own funds, not being funds included in the Bridge Para 99 Charge, then the usual rules of subrogation to the security interest of the paid-off creditor would seem to apply: Butler v Rice [1910] 2 Ch 277; Ghana Commercial Bank v Chandiram [1960] AC 732; with the limitations explained in Burston Finance Ltd v Speirway Ltd [1974] 1 WLR 1648. The condition that payment be made out of funds not already within the ambit of the Bridge Para 99 Charge is critical: see again Re MK Airlines Ltd (in liq) [2012] EWHC 1018 (Ch).
  153. If that view of the law is accurate, then the underlying assumption made by the Registrar (who did not analyse the position) is not wrong in law. The Registrar did not, in her judgment, consider whether the facts supported the subrogation claim, but I conclude she did not address those issues because they had not been put to her by the Appellant, and they cannot now be put on appeal for all the reasons given below in paragraphs 130-132 in relation to the next broad ground of appeal.
  154. For all these reasons, and given the tests an appeal court must apply, I find that the Appellant has not made out his grounds of appeal on the issue of solvency.
  155. 7.3 Quantum referable to the Bridge Administrators' misfeasance

  156. Both parties referred to this as the "shortfall argument", although the Appellant also recognised these shortfall issues as relevant to solvency issues (Ground 2) and personal liability (Ground 4). Under this third ground of appeal (which combines a number of the individual points in the amended Appeal Notice), the Appellant argues that even if MKA was insolvent on 9 March 2009, when the administration was transferred to the GT Administrators, the Registrar failed properly to consider, or to consider at all, whether (a) MKA's insolvency necessarily indicated a shortfall to the expense creditors, whatever the asset position of the company; (b) whether any such shortfall was caused by the Bridge Administrators' breaches of duty or caused by other events; and (c) if losses were so caused, whether they were greater than the total amount of the remuneration paid.
  157. The potential significance of these matters to the analysis of the Bridge Administrators' (and hence the Appellant's) liability is highlighted above at paragraph 122. Even if these matters are, in principle, significant, however, there are three factors which suggest the Appellant cannot now appeal on these grounds.
  158. First, as noted earlier, there is no indication that these matters were raised as significant before the lower court, and the Appellant cannot now endeavour to conduct his case on a very different basis by way of appeal. The reasons for that were elaborated earlier at paragraphs 47ff. See in particular Re Southill Finance Ltd, Mullarkey v Broad [2009] EWCA Civ 2, [30]-[33]; and Jones v MBNA International Bank (unreported, CA(Civ), 30 June 2000).
  159. Secondly, to the extent that the Appellant is not attempting to run his case on different grounds, but is instead arguing that the Registrar failed to evaluate at all, or failed properly to evaluate, the true significance of the facts as she had found them to be, I do not accept that as accurate. These matters may well have been merged with the issue of solvency in the lower court, and for the reasons given above in relation to Ground 2, it is equally not possible in relation to this ground of appeal to hold that there are procedural irregularities rendering the Registrar's conclusions unjust, or for holding that they are wrong in fact. In addition, it might be said in relation to the very particular issue to be decided here, the Registrar's consideration of the evidence before her necessarily becomes less a determination of the facts themselves and more an evaluation of their significance. In those circumstances an appeal court is typically even more reluctant to find the conclusions of the lower court to be "wrong" unless the judgment of the lower court displays errors of principle: see Wellesley Partners LLP v Withers LLP [2015] EWCA Civ 1146, [2016] Ch 529, at [125]. That is not self-evidently the case here, despite the matters of principle set out in paras 122, and especially in circumstances where the principles now advanced were not put to the Registrar by the Appellant. In deciding whether a decision of the lower court is "wrong", it must be the case that due regard should be paid to the way in which arguments were advanced to the lower court. Support for that conclusion can be found in the principles underpinning Southill Finance Ltd, Mullarkey v Broad [2009] EWCA Civ 2; Jones v MBNA International Bank (unreported, CA(Civ), 30 June 2000); and King Telegraph Group Ltd [2004] EWCA Civ 613, [2005] 1 WLR 2282.
  160. Finally, even if that were not the case, the Appellant is not in a position to press those arguments to any convincing conclusion without the benefit of further evidence in support, to which the Respondents will equally want to present further evidence in reply. Furthermore, it is then likely that one or other party will then suggest that cross-examination is necessary to test the evidence, old and new. This would inevitably turn this appeal into a re-hearing of matters determined in the lower court or the determination of matters not considered at all by the lower court. That is inappropriate on an appeal. It was for that reason that I refused the Appellant's application to adduce fresh evidence, and the consequence is that the Appellant cannot make out this ground of appeal.
  161. For all these reasons, the Appellant has not made out this ground of his appeal.
  162. The Respondents, and perhaps also the Appellant, may be concerned that I have not heard their full argument on this "shortfall point", despite suggesting at the close of the first two days of the appeal that I was likely to do so. Because I had reserved my decision on whether to allow the Appellant to adduce fresh evidence, counsel for the Respondents held back on the detail of his submissions on this shortfall point. However, I have already found in favour of the Respondents on this ground of appeal, and do not see any advantage to either party, or to the administration of justice, in permitting further argument on the facts as they were documented before the Registrar, and I have earlier in this judgment refused permission for either side to adduce new evidence.
  163. My reasons for declining to hear further oral submissions are as follows. First, the purpose of such an argument is not to enable this court to reach its own decision on the quantum of the shortfall; this is an appeal, not a re-hearing. The purpose of any further submissions is merely to determine whether an appeal against the findings of the Registrar should be allowed. Given that the Registrar's task was to determine relevant facts and then evaluate their significance, an appeal can only be allowed if the Registrar's conclusions were "wrong". In the light of what has already been said in this judgment on the tests to be applied, further arguments pressing the robustness of the evidence presented by each of the parties to the Registrar is unlikely to alter those conclusions. The position remains that the Registrar had to decide which approach she preferred and what consequences then followed, and I have declined to find her approach "wrong" to the extent required for a successful appeal.
  164. Secondly, at the close of the first two days of the appeal hearing, the Respondents suggested that after hearing further submissions on the shortfall point I might decide that the Registrar had exercised her discretion inappropriately in determining the particular quantum ordered to be paid by the Appellant to the Respondents. However, I regard that as most unlikely, especially on the Respondents' assumption that I might be doing so despite not having found her determination "wrong" on the facts. The grounds for an appeal court to interfere in a lower court's exercise of discretion were noted earlier. See too Henderson v Foxworth Investments Ltd [2014] UKSC 41, [2014] 1 WLR 2600 at [66]-[67], also set out at para 40 above. Given the Registrar's findings of fact as well as the reasons the Registrar gave for her exercise of discretion, I hold that this test for a wrong exercise of discretion is not met on the submissions currently advanced before this court (see below at para 139), and would seem unlikely to succeed after further submissions from either party no matter what further evidence might conceivably be produced in relation to the shortfall.
  165. Finally, and perhaps most importantly, I am concerned that further argument on this matter is, as a matter of principle, unproductive. Both parties persist with the approaches they took before the Registrar. The Appellant urges this court to accept the evidence of solvency in the Appellant's EOS, being contemporaneous evidence at the time the Bridge Administration ceased, and moreover evidence that a different court considered in ordering the transfer of the administration to the GT Administrators. However, the fact that this evidence is contemporaneous, and accepted by an earlier court, does not necessarily guarantee that it is accurate. The Respondents regard that evidence as unreliable, and wish instead to present what they suggest is the only other reliable evidence available to the court, that being the current assessment of the actual state of the shortfall to the Bridge Para 99 Charge. My problem is that I do not accept that the current state of the shortfall to the Bridge Para 99 Charge necessarily indicates that there was a misfeasance by the Bridge Administrators in paying remuneration in breach of the statutory priority rules: see above, para 122. Although this argument was not advanced before the Registrar, and I would suggest it cannot now be advanced on appeal as it is far too late to do so, its relevance as a matter of principle suggests that further pursuit of this competing evidence is a waste of the resources of all concerned, and I do not wish to demand or encourage that.
  166. 7.4 Quantum properly referable to the Appellant

  167. Next, the Appellant now argues that even if MKA monies had been misapplied, the Registrar erred in ordering the Appellant to pay an amount equal to the entire remuneration payments. In reaching her conclusion, it is suggested that the Registrar failed to take due account of (a) the fact that the Appellant had not participated in the misfeasance, having neither invoiced MKA for the remuneration sums, nor received any of the payments; or (b) the particular aspects of the Appellant's evidence relating to the final transfer of US$448,208.97 on 5 March 2009 to BBR in part-payment of remuneration. In addition, in requiring the Appellant to repay the entire remuneration sum, the Registrar failed to exercise her discretion properly.
  168. I will consider first the argument that the Registrar failed to exercise her discretion properly. The Registrar declined to relieve the Appellant from any part of the liability for the Bridge Administrators' misfeasance, regarding it as important, it seems, that he was jointly and severally liable for the full amount of the improper disbursements regardless of whether he was the person who had requested the disbursements or personally received them, and, further, that he should not be relieved of that liability in circumstances where relief to him would come at a cost to the preferred expense creditors. Given that the Registrar's initial legal starting point of joint and several liability was not disputed before her, it is difficult to fault her logic in the exercise of her discretion, and I decline to do so.
  169. Secondly, it is suggested that the Registrar failed to take due account of the nature of a particular final payment made to BBR allegedly by way of disbursement of remuneration. I comment on that payment later in this judgment, but cannot see any specific reference was made to it by the Appellant's counsel in his skeleton or in oral argument made to the Registrar. That being the case, it would seem impossible for the Registrar's failure to consider the matter to be an issue grounding an appeal.
  170. Finally, the further complaint is that the Registrar did not look to the Appellant's individual responsibility for disbursing the remuneration payments nor his individual receipt of them. This is true, but is entirely because the Registrar assumed that the Appellant was jointly and severally liable for any breaches committed by the Bridge Administrators, and the contrary had not been put to her. On this basis, I again find that the Appellant cannot sustain an appeal against the Registrar's judgment on this basis.
  171. Accordingly, I find that the Appellant fails on this ground of appeal.
  172. 7. 5 Proof of individual or joint and several liability of the Appellant for misfeasance

  173. Under this ground of appeal, the Appellant argues that the Registrar was wrong in law to assume that simply because monies had been misapplied by the Bridge Administrators, it followed that each joint administrator was then jointly and severally liable for that breach. She should, instead, have considered the particular individual misfeasance of the Appellant.
  174. The Appellant was one of three Bridge Administrators appointed to the Bridge Administration. The misfeasance application is against him alone because of a settlement agreement entered into by the other two of the Bridge Administrators with MKA (in CVA), BBR and TAA dated 19 August 2009 which compromised claims by any party to the agreement. This agreement did not include the Appellant, and the Registrar concluded, at [43] of her judgment, that this "has left [the Appellant] exposed to this claim".
  175. Before the Registrar, the Respondents advanced the legal conclusion of joint and several liability without argument and the Appellant did not address the issue. It is hardly surprising, therefore, that the Registrar did not consider the matter. The natural assumption is that the point was conceded.
  176. The Appellant is now seeking to advance a new point of law not raised before the lower court. The point is potentially an important one, but its resolution on this appeal would require the appeal court's permission to advance the new point, and its consideration of new evidence in order to determine its application on the facts in this appeal. Earlier in this judgment I gave my reasons for being disinclined to allow the Appellant to advance the new point (notwithstanding its inclusion in the Appeal Notice) (see paras 45-62) and for refusing permission to adduce new evidence (see paras 63-80). On that basis, the Appellant cannot succeed on this ground of appeal.
  177. In deciding against the Appellant, I favoured finality of litigation over permitting the Appellant to raise new arguments now in order to achieve what the Appellant sees as the just outcome. The Appellant indicates that the reason for not advancing this argument at the earlier hearing is that he was not advised by his previous legal representatives to do so. It is tempting to regard the point as sufficiently obvious that an experienced insolvency practitioner advised by counsel should have been alert to the matter, thus reinforcing the conclusion that it is now too late to advance the argument. On the other hand, and in the context of receivers rather than administrators, Lightman & Moss on the Law of Administrators and Receivers of Companies, 6th edn, 2017 ("Lightman & Moss"), at para 7-020, note that the issue of individual liability is rarely a practical one, because joint receivers (and, equally it would seem, joint administrators) are typically all partners in the same firm, and will be jointly and severally liable on that basis regardless of individual or joint liability as receivers. But that is not the case here. Two of the joint administrators were partners in BBR, but the Appellant was a consultant to the firm, not a partner. Further, the point that the Appellant was a consultant rather than a partner seems not to have been taken elsewhere: in Re MK Airlines Ltd (in liq) [2012] EWHC 1018 (Ch), at [2], the Chancellor refers to the Appellant as a partner of BBR.
  178. The dilemma thus presented to an appeal court in pursuing the objective of dealing with cases justly and at proportionate cost is, in this context, obvious. In endeavouring to hold that balance, I have found against the Appellant in the circumstances obtaining here, but I also gratefully adopt the approach taken in similarly difficult circumstances in Glatt v Sinclair [2013] EWCA Civ 241, [2013] 1 WLR 3602 (see above at para 50), and will consider the potential relevance of the new point of law to the Appellant's case, even though it can be of no practical benefit to him given my earlier finding.
  179. The notice of appointment indicates that the three Bridge Administrators were appointed as joint administrators to act jointly and severally, with any functions to be exercised by them under Schedule B1 able to be exercised by any of them acting jointly or acting alone. There are thus no functions under the Bridge Administration where the administrators are required by the terms of their appointment to act jointly; they can each carry out the necessary functions individually. The contrast between functions which must of necessity be undertaken jointly and those which can be undertaken individually is drawn in IA 1986 Schedule B1 r.100(2) (requiring this statement of the division between the different functions), r.101 (setting out liabilities where the functions are required to be performed jointly), and, by contrast, r.102 (dealing with liability when the functions may be performed individually). Note, in particular, r.102(2), which makes it plain that references in IR 1986 to "administrator" in the context of administrators permitted to act individually is a reference to any of the individuals: by implication, therefore, it is not to be taken as a reference to all of them, as is the position when they are necessarily required to act jointly (r.101).
  180. The consequence of all of this must surely be the same as that which follows in the case of similarly appointed receivers in respect of secured property. In that context, Lightman & Moss note at para [7-022]:
  181. "Where receivers are appointed and empowered to act severally, and one of their number commits a breach of duty to the company or to his appointor, it is suggested that he will be individually liable for his breach of duty or tort, and his co-receivers will not be jointly or vicariously liable with him unless they participate in the misconduct in question. The co-appointees may become liable to the company or their appointor if it is shown that they knew or were on inquiry as to their co-receiver's misconduct and failed in their own separate duty to take steps to prevent such acts."
  182. In support of this suggestion they cite, by analogy with the law on directors, Dovey v Cory [1901] AC 477 (HL); Re City Equitable Fire Insurance Co Ltd [1925] Ch 407 (CA), 452–453, 459; and Secretary of State for Trade and Industry v Baker [1999] 1 BCLC 433, 487–489 (Jonathan Parker J), [2001] B.C.C. 273, 283 (CA). They might also have cited in support the rules on liabilities of trustees appointed to manage trust assets. Many functions exercised by trustees have to be performed jointly, but misfeasance or breach of duty claims are almost invariably brought against each of the trustees individually unless in fact they did all perform the act in question jointly: Bahin v Hughes (1886) 31 Ch D 390 (CA); Snell's Equity, 33rd edn, 2017, [30-005]-[30-006].
  183. In the context of directors, Cohen v Selby (Re Simmon Box (Diamonds) Ltd) [2002] BCC 82, [2001] 1 BCLC 176 (CA), indicates what is then required by way of separate allegations and proof against each wrongdoer.
  184. Clearly that was not the way the arguments were run before the Registrar (see the Registrar's judgment, [43], [45], [48]). Since the Bridge Administrators were appointed on the basis that, in performing any functions, each of them was entitled to act jointly or act alone, the law would seem to require proof of a misfeasance by the individual against whom the misfeasance claim is made, or proof of a joint misfeasance (a joint act) for which any one of them may have been jointly and severally liable.
  185. However, where the misfeasance consists in paying out sums towards remuneration in breach of the statutory priorities rules, it would seem likely that all the Administrators will be jointly and severally liable for the resulting loss to company assets regardless of which one of them instigated or received the payments. This is not because the law set out earlier is not applied, but because, although only one of them committed the primary breach, the other administrators should also be concerned with due observance of the statutory priority rules, and they too will bear responsibility for any non-observance that would not have happened if they had performed their duties properly. If that is correct, then this new point of law now raised by the Appellant may not have assisted him in resisting the claims of misfeasance brought against him.
  186. That conclusion would not of course hold for many other forms of misfeasance, where individual wrongdoing and individual liability would need to be proven, and if it were then intended to make applications against joint appointees, there would have to be some legal basis for finding them jointly and severally liable. See Lightman & Moss, para [7-022], cited earlier. In this context only, the specific attention drawn by the Appellant on this appeal (in his amended grounds of appeal) to the final remuneration payment of US$448,208.97 would become material. The documents before this court and before the Registrar raised some concerns about the true nature of this payment, but the point was not raised in argument before the Registrar and no evidence was tested. That would have been essential before any conclusions could be drawn.
  187. Even on the assumption that the Appellant is jointly and severally liable for a misfeasance of any one of the Bridge Administrators, that liability is not simply to pay back whatever was paid out by way of remuneration, but only what was paid out by way of misfeasance, being in breach of the statutory priority rules. In meeting that test, the Respondents must clearly give credit for any sums they have already received by way of meeting such a claim: see Re AMF International Ltd [1996] BCC 335.
  188. This uncontroversial point of law seemed important in this context only because I was aware that the reason the Respondents were pursuing the Appellant alone was because the Respondents had a settlement agreement with the other two Bridge Administrators. In principle, it would seem necessary that any recoveries under that settlement agreement be brought into account. The issue of the settlement agreement was not raised on appeal and had not been raised before the Registrar. The relevant documents were, however, before both courts, and they make it clear why no reference was made to them.
  189. As the documents reveal, the settlement agreement is not one between MKA and two of its previous joint administrators whereby they make a payment to MKA in order to settle potential claims. Instead, the gist of the agreement is a settlement between TAA and the two joint administrators in relation to outstanding claims for payment of remuneration owing on the Bridge Administration, and is in in full and final settlement of those claims. The nature of that settlement agreement, with claims for remuneration paid by TAA, rather confirms my earlier view of the Bridge Administrators' entitlement to have their remuneration paid by TAA, otherwise there seems very little reason for TAA to agree to pay significant sums to settle this claim. MKA is also a party to this settlement, and, if binding, the arrangement is a fortunate one for the two Bridge Administrators, since MKA has agreed in this settlement to release all possible claims against these administrators in exchange for a release by them of all possible claims they may have against MKA. The Appellant appears to have a similar settlement arrangement concerning remuneration, but with TAA alone, and so is not similarly protected.
  190. In summary, the Appellant fails on this ground of appeal because, despite the appeal ground appearing in the amended Appeal Notice, it is a new ground on a point of law, but one which requires the Appellant to adduce fresh evidence in order to enable the legal principle to be applied to the relevant facts to make out his case, and, perhaps more significantly, to allow the Respondents to adduce evidence in reply. I have refused permission to adduce fresh evidence. In any event, on my analysis of the law as applied to the facts before the Registrar, it is unlikely that the new point raised in this ground of appeal would have altered the outcome before the Registrar.
  191. 7.6 Relief under CA 2006 s 1175

  192. This ground raises a new legal argument not put by the Appellant to the Registrar. Under this ground, the Appellant claims that the Registrar failed to consider whether the Appellant should be excused in whole or in part from his breaches of duty under CA 2006 s 1175, a jurisdiction that permits the grant of relief to administrators found to have committed misfeasances: Re Powertrain Ltd [2015] EWHC 3998 (Ch), [2016] BCC 216, [13] (Newey J), citing Re Home Treat Ltd [1991] BCC 165 (Harman J)..
  193. Since the Registrar was not requested by the Appellant to exercise such a discretion, the short answer to this challenge is that her failing to do so does not constitute a ground of appeal against the Registrar's decision. Courts are not compelled to consider on their own initiative the grant of such relief.
  194. No unacceptable injustice results in any event, however, since the Registrar did exercise her discretion in relation to the particular order she awarded under IA 1986 Schedule B1 Paragraph 75(4). Her considerations in this context are likely to have been identical to those she would have considered material in the context of an application under CA 2006 s 1175. See my earlier comments on this at para 139.
  195. Accordingly, the Appellant fails on this ground of appeal.
  196. 7.7 Salans payment/pre-administration creditors.

  197. Under this ground of appeal, the Appellant argues that, in view of the Registrar's factual findings, the Registrar was wrong in law to hold that the Appellant was in breach of duty in relation to the payment of monies to Salans for work carried out prior to the administration of the company.
  198. The issue of law relates to the Appellant's individual liability for this aspect of the misfeasance, and so is addressed in my consideration of the matters considered in paragraphs 143-159 (proof of individual misfeasance) and 138-142 (exercise of discretion). The factual matters relate to the Registrar's assessment of the quantum of the total payments to Salans that should be attributed to pre-administration payments related to the administration of MKA. The Registrar received submissions on this and made her determination at the hand down hearing. The parties differed in their approaches to this quantification, and the Registrar favoured the Respondents' approach, but the appellant has not advanced grounds sufficient to find that the Registrar's approach was "wrong" in fact or in the exercise of any discretion. The relevant documents are susceptible of different interpretation.
  199. Accordingly, I do not find this ground of appeal made out.
  200. 8. Concerns about this case

  201. Before concluding, I express one further concern about this case. The Respondents concede that evidence of the financial position under the Bridge Para 99 Charge remains uncertain. It would seem impossible for them to claim otherwise, given the evidence presented to me in this hearing. Should the Derrett Order stand, in whole or in part, it will require the Appellant to hand over sums of money to the Respondents in circumstances where it remains unclear precisely what might be needed to meet any shortfall to the expense creditors. In answer to my question to counsel for the Respondents about what would happen if the Derrett Order were enforced against the Appellant and it then turned out that there was less of a shortfall in payment to the expense creditors than anticipated, his response was that the excess funds would then be repaid or returned to the Appellant in acknowledgement that the original remuneration claims could be paid in whole or in part. To my suggestion that the Appellant may in the meantime have been made bankrupt and lose his insolvency licence, the reply was that this was a risk that administrators take. I accept that administrators take the risk of misfeasance claims, but I do not regard the personal consequences in this case as risks to which the Appellant should be exposed when the cause of that risk is uncertainty in the Respondents' calculation of the extent of any misfeasance. I cannot resolve that matter on this appeal, but it is sufficiently significant to be highlighted. Furthermore, this proposed practical approach additionally fails to address the possibility that any shortfall so found, as the Bridge Para 99 Charge is wound down, may in any event not be attributable to this particular misfeasance by the Appellant. That, too, is not something I can address here.
  202. I do, however, add that I share the concerns of Sir Andrew Morritt C (see Re MK Airlines Ltd (in liq) [2012] EWHC 1018 (Ch) at [50]) regarding the time and money obviously being expended on disputes between insolvency practitioners. I cannot believe that the issues before me could not have been resolved more quickly and cheaply than by this process.
  203. 9. Conclusions

  204. For the reasons given earlier, I find that the Appellant succeeds in his appeal in relation to the remuneration sums specified in the Derrett Order, but fails in his appeal on the Salans sums specified in that same order.
  205. I will hear counsel on the terms of any order and other consequential matters when I hand down this judgment.
  206. I thank counsel for their helpful submissions on all the detailed points raised in this appeal, and particularly for their additional assistance provided at my request.

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