On the 27th March 2017, His Honour Deemster Doyle, First Deemster and Clerk of the Rolls, delivered his judgment in Affinity Management Services Limited v Justus Limited.1 The issue before the court was whether or not to grant a receiver over Justus Limited (the "Company") when investigations were currently being conducted by the Crown Prosecution Service ("CPS") in England and Wales into the shareholder of the Company.


The Company is an Isle of Man incorporated company, the shareholder of which being Mr David John Mills ("Mr Mills"). The Company appointed Affinity Management Services Limited ("Affinity"), a corporate service provider, to provide directors for the Company. The main asset of the Company was a yacht valued at €2,350,000.

On 30th January 2017, one of the directors of the Company became aware that Mr Mills had been sentenced to 15 years imprisonment. Consequently, the directors did not want to receive any funds from Mr Mills to fund the Company and, as the Company had several creditors, the decision was made to try and sell the yacht.

However, in order to meet the operating costs and receiving income pending the sale of the yacht, the Company needed to raise some money. The Company wanted to avoid liquidation and so decided the best option would be to appoint joint receivers.

To complicate matters further, a restraint order under the English Proceeds of Crime Act 2003 had been issued over Mr Mills. A restraint order has the effect of freezing property anywhere in the world that may be liable to confiscation following a trial and the making of a confiscation order. The English prosecuting authorities had no issue with the yacht being sold, but that it should be sold subject to the variation to the restraint order and that it adheres to certain conditions. These conditions included the price and buyer and selling fees were to be agreed with the Prosecution in England the selling and that the proceeds from the sale would be deposited into a UK account.

Law relating to a Receiver

In the IoM, unless a receiver has been appointed in accordance with a security document, a court application must be made. The court's power to appoint a receiver stems from section 42 (1) of the High Court Act 1991, which provides that the court 'may by order (whether interlocutory or final) grant an injunction or appoint a receiver.' The wording is not limited to any given factual scenario or situation and the jurisdiction can be exercised 'in all cases in which it appears to the court to be just and convenient to do so. 'Section 42 (2) further states that the order can be made on any conditions the court sees fit.

A receiver's powers can be very wide and for example, can include having the full power to carry on and manage the business of the company, taking account of the property, having the power to collect any property that the company is entitled to, and/or vest any assets of the company into their names as agent. The receiver may also be permitted to bring or defend any action or proceedings in the name of the company.


Taking a pragmatic approach, His Honour Deemster Doyle concluded that the hearing could proceed without any further notice and that receivers be appointed for the Company. Whilst it was difficult to see how the appointment of receivers was proportionate (since the Company had directors and directors usually manage the affairs of the company), His Honour Deemster Doyle decided that the directors were placed in a difficult position to manage the Company. This was because the Company was unable to maintain a bank account and unable to raise funds because of the conviction of Mr Mills. The appointment of receivers would undoubtedly assist the Company in raising money and realising the yacht and the Deemster determined that it would be just and convenient to do so and that the joint receivers were now to look after the affairs of the Company.


This decision demonstrates the benefit of a statutory provision, not limited to a particular set of facts or criteria, as to when and why a receiver should be appointed. The courts discretion under the statute, can be exercised, or not, as the circumstances require. Although the directors were fully capable of handling the day-to-day matters of the Company, they were unable to perform them due to the conduct of the shareholder, giving the court an equitable reason to step in and make such an order. This pragmatic and helpful approach demonstrates that the flexible remedy of a receiver can be sought in a wide range of areas and that Manx courts appreciate the practical realities of commercial life.


 1 https://www.judgments.im/content/J1868.htm

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