The liability of the receiver
The special characteristics of the duty of a receiver bring with them that his liability, if any, must be assessed against a standard of due care which has been tuned to this. This standard boils down to the fact that a receiver ought to act as can reasonably be required of a receiver having sufficient insight and experience and performing his duties conscientiously and with dedication. Knowledge and experience exceeding the minimum requirements can to a certain extent color the standard in a concrete case: after all there is nothing against taking as a starting point a receiver with the same knowledge and experience as the party sued. In assessing the receiver’s acts a distinction must be made between compliance with strict legal and contractual obligations and those matters in which the receiver has a certain discretionary scope. In the latter case a certain restraint must be observed by the court having to judge the case and the court’s assessment could be indicated as a limited review.
In fulfilling his duties the receiver does not act in his ‘other’ professional capacity (that of advocate, accountant) and neither does he have a contractual relationship with the parties whose interests have been entrusted to him in his capacity as receiver. Moreover, the receiver often has to represent conflicting interests and he also ought to take any interests of a social nature into account. Finally the duties of a receiver often force him to take risks, whereas other professionals must protect their client against risks as much as possible. Therefore a different assessment standard applies to the liability of professionals such as advocates and civil-law notaries than to receivers. If the acts or omissions of the receiver can bear the standard of due care and something nevertheless goes wrong, this is considered to be the normal ‘business risk’.
Does this mean that the receiver is not so quickly liable as an advocate (lawyer, attorney) or accountant when it appears (with hindsight) that he has made a mistake? This question is difficult to answer in the abstract. The basic standard is in any event different. But when it is assumed in a concrete case that a receiver should not be considered too soon as being liable for all his actions because he had to act quickly and on the basis of faulty information or limited (time for) inspecting it, such an argument can – should the occasion arise – apply likewise to an advocate or accountant.
The acts and/or omissions of a receiver must be considered ex tunc. So it is about facts and circumstances which were known at that moment and not about ‘wisdom after the event’. In practice receivers and administrators are quite quickly held liable (by creditors of the estate), this quite often with no other intention than the creation of a nuisance value. The (only) objective is then to exert pressure to persuade the administrator or receiver to perform a certain act or to prompt him to more speed. A more delicate use of holding the receiver or administrator liable is required.
In connection with external liability a distinction can be made between the liability of the receiver q.q. (which can only lead to recovery from the bankruptcy estate) and pro se (that can only lead to recovery from the private assets of the receiver). Stricter requirements should be set with regard to liability pro se than to liability q.q. A comparison can be made for instance with the managing directors of a company limited by shares or a private company with limited liability: they can also act wrongfully ‘in their capacity’ and ‘privately’ but these two categories must be distinguished from each other. The liability pro se requires ‘intention’, ‘serious neglect of his duties’, ‘conscious recklessness’ or ‘acting contrary to the law’.
Attorney (Lawyer) / Partner
(21 December 2012)