Administrators selling Formula 1 motor racing team held to owe no duty of care

15/12/20

The Force India F1 team was faring better on the track than it was financially in 2018. The company that owned the team went into administration that summer. The administrators set up a sale process, which sparked interest from a number of bidders. The two frontrunners were Racing Point, a company owned by a Canadian businessman, Lawrence Stroll, and Uralkali, a Russian fertiliser business. The team ended up being sold to Mr Stroll, whose primary motivation for acquiring the team was to bolster his son Lance’s racing career.

Uralkali brought claims in negligence and breach of confidence against the administrators, alleging that the administrators failed to apply the stated bid criteria and operate a level playing field between the bidders, contrary to representations made to Uralkali.

Following a two-week trial of liability in November, Miles J gave judgment on 15 December 2020 in favour of the administrators. The novel question of law that the case raised was whether the administrators assumed a duty of care towards a bidder in respect of statements regarding the bid process. The judge held that, in general, administrators (as agents of the company) will not themselves owe a duty of care in respect of statements they make in relation to a sale process that they set up and conduct qua administrators. The case will be of particular interest to practitioners dealing with the question whether a seller who institutes a formal bid process may be held to owe a duty of care to prospective bidders in respect of the bid criteria to be applied, as well as to those involved in administrations more generally.

The judgment is here.