New judgment: Sentinel Broadcast (in administration) v Lloyds Bank [2025] EWHC 3036 (Comm)

Sentinel Broadcast (“Sentinel”) is a company now acting by its administrators. It is heavily insolvent and owes hundreds of millions to creditors. Prior to its administration, its director gave instructions to the bank to make payments of £1.078 billion to another company. Sentinel alleges that the other company had no legal or other entitlement to the money and that the instructions were given by the director in breach of section 172 CA 2006 and therefore without actual authority. As, so Sentinel alleges, the bank had reasonable grounds for believing that the director was not authorised, it is claimed that the payment instructions do not bind Sentinel and that the insolvent estate is entitled to recover the money as a debt under what used to be called a “Quincecare” claim but is now governed by the principles set out in Philipp.

The bank applied for summary judgment on the basis, so it was said, that directors do have actual authority to breach section 172 CA 2006 provided such actions amount to a fraud “by” the company rather than “on” the company. This distinction was said to be supported by a 1954 House of Lords case called Briess v Woolley [1954] AC 333 and impliedly approved by the Supreme Court in Philipp. This would amount to a radical departure from the way in which the courts have previously considered the interaction of agency and company law.

In his judgment, Butcher J rejected the bank’s arguments. He held that the question of actual authority was a matter for trial. He was not prepared to hold that the bank’s argument was wrong in law – legal arguments in a developing area of law should be decided on actual rather than assumed facts. The matter will now go forward to trial to consider if Sentinel is able to establish lack of actual and apparent authority; and whether Sentinel is able to make recoveries for its creditors.

Joseph Curl KC and Jon Colclough acted for Sentinel (acting by its administrators, Nick Simmonds and Carl Jackson of Quantuma), instructed by Isadore Goldman.

The judgment is available here.