Lindop v Stewart Noble & Sons Ltd & Ors [1999] ScotCS 147 (11 June 1999)

Lindop v Stewart Noble & Sons Ltd & Ors [1999] ScotCS 147 (11 June 1999)

Adoption of a contract of employment by a receiver under section 57 of the Insolvency Act 1986 does not, by itself, constitute the incurring of a liability by or on behalf of the receiver for the purposes of section 60(1)(c). Only new contractual obligations entered into by the receiver, or amendments/innovations creating new obligations, qualify for priority ranking under section 60(1)(c). Claims for damages in lieu of notice arising from mere adoption and subsequent termination of an existing contract do not rank under section 60(1)(c).

Citation
[1999] ScotCS 147
Parties
Pursuer and Reclaimer: Roger Lindop; First Defender and Respondent: Stewart Noble & Sons Limited; Second Defender and Respondent (as Receiver and Individual): Matthew Purdon Henderson; Second Defender and Respondent (as Receiver and Individual): Cameron King Russell
Jurisdiction
Scotland
Judgment Date
11 June 1999
Procedural Posture
Reclaiming Motion (appeal) in Civil Proceedings / Inner House, Court of Session (appeal From Lord Ordinary)
Outcome
Reclaiming motion refused; interlocutor of Lord Ordinary recalled and new interlocutor pronounced as per defenders' pleas.
Legal Topics
Receivership, Priority of Claims, Contracts of Employment, Personal Liability of Receiver, Statutory Interpretation
Insolvency Law Employment Law Company Law Receivership Priority of Claims Contracts of Employment Personal Liability of Receiver Statutory Interpretation

Case Brief

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Parties

Roger Lindop

Pursuer and Reclaimer

Stewart Noble & Sons Limited

First Defender and Respondent

Matthew Purdon Henderson

Second Defender and Respondent (as Receiver and Individual)

Cameron King Russell

Second Defender and Respondent (as Receiver and Individual)

Procedural Posture

Reclaiming Motion (appeal) in Civil Proceedings / Inner House, Court of Session (appeal From Lord Ordinary)

Legal Issues

  1. 1 Whether an employee whose contract of employment is adopted by a receiver is entitled to rank as a creditor in respect of damages in lieu of notice under section 60(1)(c) of the Insolvency Act 1986
  2. 2 Whether adoption of a contract of employment by a receiver constitutes incurring a liability by or on behalf of the receiver for the purposes of section 60(1)(c)

Ratio Decidendi

Adoption of a contract of employment by a receiver under section 57 of the Insolvency Act 1986 does not, by itself, constitute the incurring of a liability by or on behalf of the receiver for the purposes of section 60(1)(c). Only new contractual obligations entered into by the receiver, or amendments/innovations creating new obligations, qualify for priority ranking under section 60(1)(c). Claims for damages in lieu of notice arising from mere adoption and subsequent termination of an existing contract do not rank under section 60(1)(c).

Court Disposition

Reclaiming motion refused; interlocutor of Lord Ordinary recalled and new interlocutor pronounced as per defenders' pleas.

Orders

  • Sustain defenders' fourth plea-in-law
  • Repel pursuer's second plea-in-law so far as it relates to ranking under section 60(1)(c)