Administrator's sale of equipment subject to retention of title and the defence of justification

The England and Wales High Court (Chancery Division) has delivered a decision which looked at the sale of company equipment in administration and the defence of justification. In Lictor Anstalt (A Company) v MIR Steel UK Ltd & Ors [2011] EWHC 3310 (Ch), Mr Justice David Richards dealt with whether steel-making equipment subject to a retention of title held by Lictor Anstalt, was sold unlawfully by the administrators of Alphasteel Limited (in liquidation) to Libala Limited. The purchaser of the equipment argued the defence of justification should be available in such circumstances.

This case confirms that no claim in tort may be brought against an administrator, as an agent, for procuring their principal to act in breach of contract, provided they have acted in good faith. The defence of justification arguably should extend to circumstances where an administrator performs an action which is incidental to discharging its statutory obligations, however is novel and has wide reaching implications. Without in depth analysis and prior findings of fact, it was not appropriate for determination.