Court of Appeal rules on trust status and client money protection in relation to Lehman Bros funds
| DOI | https://doi.org/10.1108/13581981111106194 |
| Date | 22 February 2011 |
| Published date | 22 February 2011 |
| Pages | 85-93 |
| Author | Joanna Gray |
| Subject Matter | Accounting & finance |
LEGAL COMMENTARY
Court of Appeal rules on trust
status and client money
protection in relation
to Lehman Bros funds
Joanna Gray
University of Newcastle upon Tyne, Newcastle upon Tyne, UK
Abstract
Purpose – The purpose of this paper is to discuss the Court of Appeal’s consideration regarding
Lehman Bros International (Europe) (in Administration) (Court of Appeal: Civil Division: Lord
Neuberger, Lady Justice Arden and Sir Mark Waller). Date of Judgment: 2 August 2010.
Design/methodology/approach – The paper outlines the facts surrounding the cas e and
comments on the decision.
Findings – The court ruled on trust status and client money protection in relation to Lehman Bros
funds.
Originality/value – This judgment provides a rare example of the courts’ application of the Client
Assets Sourcebook rules and guidance in general private law disputes about property ownership and
entitlement that invariably arise within the context of insolvency.
Keywords Legal decisions,Courts of appeal
Paper type Research paper
Re Lehman Bros International (Europe) (in Administration) (Court of Appeal: Civil
Division: Lord Neuberger, Lady Justice Arden and Sir Mark Waller).
Date of Judgment: 2 August 2010.
Facts
The factual background to this appeal from the December 2009 decision of Mr Justice
Briggs in the Chancery Division on issues relating to the application of client money
protective regulatory rules in the administration of Lehman Bros was extremely
complex. A lengthy assumed statement of facts was agreed between all the parties
involved and the Lehmans administrators and it was used as the factual basis for both
the High Court and the Court of Appeal decisions. Prior to setting out that statement
Mr Justice Briggs set out how the High Court saw the essential nature of the
applications to the court:
This is a further application by the Administrators of Lehman Brothers International (Europe)
(“LBIE”) for directions pursuant to paragraph 63 of Schedule B1 to the Insolvency Act 1986. It
has come to be known as the Client Money Application because the Administrators have
sought to have determined, as far as possible, all issues concerning the interpretation and
application to the administration of LBIE of the rules about client money in Chapter 7 of the
Client Assets Sourcebook (“CASS7”) issued by the Financial Services Authority (“the FSA”)
The current issue and full text archive of this journal is available at
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Legal
commentary
85
Journal of Financial Regulation and
Compliance
Vol. 19 No. 1, 2011
pp. 85-93
qEmerald Group Publishing Limited
1358-1988
DOI 10.1108/13581981111106194
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