Peak Hotels & Resorts Ltd (in Liquidation) sub nom (1) Russell Crumpler (2) Sarah Bower (Joint Liquidators of Peak Hotels & Resorts Ltd (In Liquidation)) v Candey Ltd (2017)

The Facts

The case concerned an application made by the Liquidators of a BVI incorporated company, Peak Hotels and Resorts Limited ("Peak"). The application was intended to determine the effectiveness of a charge granted by Peak to Candey Limited ("Candey"), Peak's former solicitor.

Peak was the holding company of a joint venture vehicle that became the subject of lengthy international litigation proceedings following the breakdown of relations between the joint venture partners and shareholders. Candey acted for peak in the litigation.

In October 2015, Peak ran into financial difficulty and fell into arrears with Candey. To assist with Peak's cashflow, Peak and Candey entered into a Fixed Fee Agreement that covered payment of the arrears as well as all of its future legal fees. Under the Fixed Fee Agreement, Candey was entitled to £3.8 million for its future services. The fee was purportedly secured by way of a charge registered in the BVI pursuant to a Charging Deed annexed to the Fixed Fee Agreement.

Peak went into liquidation in the BVI on 8 February 2016. The proceedings were subsequently recognised under the Cross-Border Insolvency Regulations (the "CBIR"), meaning s245 Insolvency Act 1986 was potentially applicable.

The Matters in Dispute

By the time Peak went liquidation, Candey had carried out substantial work for Peak to the value of £1.2 million, but claimed to be secured for the full £3.8 million by way of two key assets. The Liquidators, wanting to realise monies for Peak's estate, challenged the asserted security.

The first asset was a sum of $1.5 million held on trust for Peak (the "Trust Monies"). The Liquidators accepted that the Trust Monies were charged under the Charging Deed but asserted that the charge was floating and limited in scope and effect by virtue of s245 IA 1986.

The second asset was a sum of approximately $11,663,000 paid out of court to the Liquidators as a result of the litigation proceedings referred to above (the "Court Monies"). The Liquidators argued that the Court Monies fell outside the Charging Deed for the following reasons:

  1. Peak had no relevant interest in the monies until they were ordered to be paid out of court to Peak; and
  2. upon being paid out of court, the Court Monies represented the work of the Liquidators, and was therefore an asset generated by them in the liquidation, so was not caught by the Charging Deed.

In the alternative, the Liquidators argued that the charge was floating and limited in efficacy under s245 IA 1986.

Candey argued there was a valid fixed charge over both sums of money and, therefore, that s245 IA 1986 did not apply. If either charge was found to be floating, Candey asserted that the 4 stage test under s245 IA 1986 was not satisfied on the facts.

The Decision

The application of the Liquidators was granted in part.

Were the charges fixed or floating?

The Court found that charges were clearly floating as the Charging Deed did not contain sufficient restrictions on dealings to warrant being fixed.

Were the charges subject to the Charging Deed?

Both parties agreed that the Trust Monies were covered by clause 1 of the Charging Deed.

The Court found that the Court Monies also fell within the Charging Deed. The Court cited a large number of cases in reaching its decision and the matter turned on the fact that Peak maintained an interest in Court Monies, as follows:

  1. Peak had the right to apply that the Court Monies be properly administered, in accordance with the purpose for which they were paid into court;
  2. after the proper administration of the Court Monies had been achieved, Peak would be treated as the owner of the Court Monies that remained in court (if any); and
  3. although the Liquidators took steps to obtain the Court Monies, they had not created a new asset that fell outside the charging deed.

Did s.245 IA 1986 apply?

S245 applied to this case by virtue of Article 23 Schedule 1 to the CBIR. The Court also decided the charge operated as a floating charge, had been created within the 12 month "relation back" period and that Peak had been insolvent at that time. The issue was the value of the services provided after the charge was created, which was adjourned for further evidence.


The case provides a useful recap on the application of the CBIR in cross-border insolvency proceedings. It also adds to the existing case law on the interests and rights of the parties to litigation over monies paid into Court pursuant to that litigation, as well as the jurisprudential nature in which the Court holds such funds.

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