The purpose of this guide is to explain the role of the independent supervising solicitor and the key aspects to look at when choosing the right person for the job.

I am going to give you some free top tips based on my 25 odd years’ experience, what you need to look out for, the pitfalls and what can go wrong on the day.

What is the role of an independent supervising solicitor?

In short, the supervising solicitor is an independent officer of the court and must also be independent of both the applicant, respondent, and their respective solicitors. As an officer of the court, the supervising solicitors job, as the name suggests, is to independently supervise and ensure that the search order is properly executed.

The moment the search order has been served on the respondent; the supervising solicitor’s job is to explain the order in everyday language to the respondent so that they understand what it means in practical terms. The exact wording of the search and seizure orders will differ but generally the respondent must be advised of:

• Their right to obtain legal advice.
• Their right to apply to vary or discharge the order; and
• The fact that they may be entitled to claim legal professional privilege or privilege against self-incrimination.

Once you read this guide, I invite you to apply for a complimentary no-cost “independent supervising solicitor consultation” with me to discover how I can use my experience to make sure that the court order is executed smoothly and in accordance with the terms of the order.

Wishing you every success.
James Edward.
Solicitor and Partner.
James Edward & Associates.

TIP 1: Do not make the mistake of thinking you can read the Order on the way to the subject premises-be prepared!

This reminds me of the military adage, the 6P’s: proper planning and preparation prevents poor performance. A great deal of time and expense is invested in the court application process by the Provisional Liquidator and the evidence seized could help uncover millions of pounds worth of assets, whether through a provisional liquidation or otherwise. Accordingly, it’s paramount to invest time getting your ducks in a row.

Any supervising solicitor worth their salt must be familiar with the terms of the order as there certainly won’t be time to read the order on the job. An order and the appendices, which have been carefully crafted by the applicant provisional liquidator, their solicitors and counsel, could be 20 pages long.
So, when you have been up at the crack of dawn to travel to the premises, that is not the time to start reading through the detail of the order.

The reason for this is that in my experience things can happen very quickly. One never knows what will happen on an early morning ‘raid’. Some respondent directors will be in shock, others sensible and compliant, whilst other directors may overreact and panic. If you are ill prepared and have not absorbed the dos and don’ts of the court order you may find yourself becoming overwhelmed by what’s happening on the ground and this is when mistakes are likely to happen.

Having supervised the execution of numerous search and seizure orders at James Edward & Associates we understand the importance of being familiar with the terms of the order so that we can quickly defuse volatile situations in a professional manner. This naturally assists with the administration of justice ensuring that provisional liquidators are able to extract and safeguard key evidence in a cost effective and efficient way.

The last thing you want to see happen is for the seizure order to be declared invalid and open to criticism from the court or the respondent director’s lawyers, and the evidence seized ruled inadmissible. Another point on the preparation front is to ensure that the provisional liquidator has a list of the company’s mobile phones to avoid any arguments on the day as to whether or not they are company property. Have a list of the numbers to hand and any phone bills addressed to the company.

If things go wrong and the search and seizure order is wrongly executed, just think of the costs thrown away, of the lawyers’, their agents and of course not to mention the creditors time such as HMRC.

Preparation also means being familiar with the technical side of knowing the relevant rules. Search orders are often prepared on short notice and therefore cannot reasonably be expected to cover every prospect which arises on the day of the search.

Disputes can arise between parties on the day of the search in respect of the scope of the order which cannot be resolved save with a determination from the court. Part of the supervising solicitor’s role is to ensure that the search is limited to the specific documents and parameters in the order.

They must prevent any unauthorised search beyond the scope of the order. Should a dispute arise, the supervising solicitor, can exercise reasonable limited discretion in relation to the execution of the search pursuant to CPR PD 25A.7.5(13) or may refer such issues to the court for resolution taking any items which form the basis of the dispute into safekeeping in the absence of an agreement between the parties.

From the outset, it is crucial to ensure that the supervising solicitor you instruct has the required expertise in these situations and who has prepared thoroughly through meetings with colleagues and the lawyers concerned to try and manage the risk of things going wrong on the big day.

TIP 2: Expertise and good communication skills with the respondent director.

There is no real science behind the latter, and I’m certainly not a psychologist but knowing how to deal with a director and how to read them can be highly advantageous. The respondent directors may not have a good command of English or understand the terms of the order, so it’s very important to remain patient and explain the order in detail. If you don’t, you will certainly not be doing your job properly and it may mean that vital evidence is not seized.

By way of example on one occasion, a director refused to hand over his company mobile phone to the provisional liquidator’s agents. I decided to take the director aside and have a private conversation where we were not overheard to hear his objection to delivering up the company’s mobile phone. It turned out on this particular occasion that he had private photographs which he did not wish to share. My advice to the director was that under the terms of the order the phone had to be delivered up to the provisional liquidator. The director did not like the advice but I explained the consequences of breaching the order, including the penal notice and what was meant by contempt of court.

The best solution I have always found it is to obviously treat the respondents with the utmost respect, keep calm and explain the order in terms they will understand and to emphasise that as an officer of the court I am neutral and not working for the provisional liquidator.

TIP 3: Ensure you have colleagues on hand who have previous experience.

Trying to learn on the job when supervising a search and seizure order is extremely difficult. This is because there are too many moving parts. It’s not uncommon, to have a small team of process servers barging through the company premise’s front door weighed down with boxes of evidence, with receptionists and other staff from the respondent company startled, all wondering what on earth is going on.

Then there is the company director to deal with who as I say, might be in shock, compliant or react aggressively.

Accordingly, it’s vital to have well trained and experienced colleagues who know how to handle the situation who have all learned from previous searches.

That’s why at James Edward & Associates we will sit down together before the date of the execution and talk through the terms of the order and discuss what the order does and does not permit. We even rehearse what might happen on the day and we ask ourselves what could go wrong on the big day of the search.

By way of example, on one occasion I was supervising the execution of the order part of which included the seizure of various mobile phones on business premises. An argument broke out between the company staff and provisional liquidator’s agents.

I had been in another part of the five storey business premises watching a server being digitally copied and analysed, but fortunately an experienced James Edward & Associates colleague was able to calm the situation down with the company staff, until I was able to join him to explain the order to the employees.

If you turn up with colleagues with no prior experience it is more likely that if things go wrong, they will not be able to react in the correct manner.

Tip 4: Be ready for the unexpected.

Risk management is all about trying to reduce the threats of things going wrong. Of course, notwithstanding the former sometimes with all the planning in the world, the unexpected can happen.

With all of the time and expense invested in the application for the search and seizure order it’s important to have an experienced supervising solicitor and their team who are able to deal with the unexpected.

On one particular search and seizure case, where I was acting as the independent supervising solicitor, there were numerous members of the provisional liquidator team. These consisted of lawyers, process servers, security, and digital computer experts. The group probably consisted of 20 or so people which meant that we had to travel separately in our vehicles to the company’s premises in a busy high street with no parking.

Whilst I was parking and unbeknown to me it came to my attention that one of the provisional liquidators team was extremely keen to start seizing evidence and was going to do so before I had even arrived at the premises and read the order to the respondent director. Obviously it would have meant that I was not supervising the gathering of the evidence or available to deal with any queries from the director about the terms of the order. The impact of the latter could again have been extremely costly.

Do not assume that a provisional liquidator’s team will understand your role. Talk them through what is going to happen, paint a picture for them so they can visualise the steps that will be taken on the day.

Tip 5: keep detailed and contemporaneous notes.

A key aspect of the supervising solicitor’s role is advising the respondent in respect of the terms and effect of the search and seizure order including any rights they have pursuant to the latter. How this information is communicated is crucial and the respondent must be advised in plain English.

Attention to detail

Under CPR Practice Direction 25A, the supervising solicitor also has a vital role in precisely recording events on the day of the search by way of a report filed at court shortly after the search.

The supervising solicitor’s report sets out compliance with his/her duties but can also be a crucial document for either party following the search should a dispute arise in respect of compliance with the order. Supervising solicitors must also ensure compliance with their other technical duties such as compiling a list of materials removed from the premises and allowing the respondent to check the list and have a copy of the same.

What happens after a search has taken place?

After the search and seizure, the supervising solicitor will submit their report to the court before a second hearing takes place, which both the applicant and the respondent will attend. The Respondent can address the court and ask that the search order be discharged. In either event, the matter will then proceed to trial following the usual course.

It’s Time to Take Action!

If you are planning to seek a search and seizure order it’s important to plan ahead to make sure that your chosen supervising solicitor is available. To do this please call us on +44 7441912822 to make an appointment or email me on jb@jamesedwardassociates.com

About the author

James Edward L.L.B (Hons) is a solicitor and partner and an expert in insolvency law who specialises in insolvency litigation. He has acted as an independent supervising solicitor on numerous occasions. James has also acted for and advised the UK’s most experienced and largest firms of insolvency practitioners when they pursue directors. James is regularly asked to write articles for leading publications and to provide talks on insolvency related matters.

So why should I instruct you and not another solicitor? What’s in it for me if we hire you?

James Edward & Associates are insolvency litigation specialists; we have a wealth of experience and knowledge to draw on.

What others say about us?
“I was appointed as the provisional liquidator and James Edward was the independent supervising solicitor, appointed by order of the court. We had a very early start but under Jeremy’s expert supervision, the search and seizure was handled professionally throughout. It certainly took a lot of pressure out of the situation on the day.”

“James Edward was the independent supervising solicitor on a provisional liquidation I worked on. James was extremely professional, calm and collected in supervising the order and in dealing with the director” Head of Investigations.”

“James Edward and the team at James Edward & Associates has been completely supportive and helped us to navigate a very negative 9-month legal problem. Their attention to detail and common-sense approach to tackling heated legal questions with a cool perspective, ultimately saved us 100,000’s! They cared enough when our chips were down to help us get out of a bad deal…thank you James Edward & Associates!”

“I first contacted James Edward & Associates late on a Friday morning. At the start of a bank holiday weekend. I had received by email that morning an instruction that a court hearing had been made related to an issue that I was involved with. After preliminary discussions with James Edward (Senior Partner) about the case I decided to instruct James Edward & Associates to represent my interests at the court hearing. In effect this only gave us 1 full working day to prepare our submissions, appoint council and be prepared. The Summit team were super-efficient and kept me up to speed on all aspects of the case. The barrister selected was professional and efficient. Our challenge to the hearing was successful and we were awarded costs. This was an important decision that we were obliged to fight at very short notice. Without the commitment of the whole team at James Edward & Associates I am sure the outcome of the copyist proceeding would have been vastly different. Their attention to detail, professionalism, speed of action and importantly communication was exemplary. Thanks to all concerned.”

Crypto assets are currently a hot topic in the insolvency world and one with which IPs are engaging across the globe.

There are increasing numbers of cases worldwide where either a crypto business has failed, crypto assets form part of an insolvent Estate or assets in an Estate are converted into crypto assets with a view to avoiding payment to creditors.

What are Crypto assets?

A crypto asset is a cryptographically secured digital representation of value or contractual rights that uses a form of distributed ledger technology and can be transferred, stored, or traded electronically. A record of transactions is held on a “blockchain”.

The term “crypto asset” is wider than crypto currency and includes, for example non -fungible tokens (“NFTs”). NFTs are a type of crypto asset whereby users purchase a cryptographic token of a particular asset (it can be either physical or digital), which cannot be swapped directly for other NFTs (ie they are non fungible).

They allow owners to cryptographically prove the authenticity of their asset and their ownership of it through the blockchain, giving it a perceived value.

NFTs are valuable because they verify the authenticity and ownership of a non-fungible asset. NFTs can digitally represent any asset such ds digital artwork.

The Law Commission has recently published a report on Digital Assets which provides further detail and a copy of this is here.

Why are so many crypto exchanges failing?

The cryptocurrency market went through a “crypto winter” at the end of last year when prices fell and a number of crypto exchanges filed for bankruptcy in the US.

A high profile example is FTX which filed for bankruptcy in November 2022 notwithstanding pre-bankruptcy valuations in excess of $30 billion. FTX’s founder and CEO, Sam Bankman-Fried, is currently being prosecuted for fraud.

What are the considerations for an IP who is appointed in respect of an insolvent crypto exchange?

Once appointed, an IP will need to review the position with any crypto assets to determine whether the assets in question belong to a creditor or whether the assets are held on a creditor’s behalf (which would mean that the creditor would rank as an unsecured creditor).

Any IP appointed should therefore review any terms and conditions related to the assets on this question and should seek legal advice on this.

What should an IP in England and Wales do initially where there are crypto assets in an insolvency?

An IP appointed in England and Wales has a duty to collect in and realise any assets in the Estate and this includes any crypto assets given the broad definition of ‘property’ in section 436 of the Insolvency Act 1986.

Faced with a situation where crypto assets may form part of an insolvent Estate, an IP should commence an investigation into their whereabouts.

Liquidators can utilise the provisions in sections 234 — 236 Insolvency Act 1986 to apply to Court to obtain books and records, compel witnesses to give evidence or make an enquiry into a company’s dealings.

Before any application is issued, a formal legal letter should be sent to the proposed Respondent giving them reasonable time to respond.

Trustees in Bankruptcy have similar powers pursuant to sections 336 and 337 Insolvency Act 1986 to compel the bankrupt and/or witnesses to give evidence or to produce documents which may assist their investigations.

In addition (or alternatively), an IP should also look to appoint an expert who should be able to try to obtain access to the blockchain to ascertain the record of any transactions.

If the above exercises are carried out, then it may also uncover further potential recoveries!

What legal action can be taken by an IP in England and Wales?

Once crypto assets are found, then lawyers should be instructed to advise on how to take any action for their recovery.

There is case law which establishes, for the purposes of interim relief, that crypto assets such as NFTs and bitcoin constitute property for the purposes of the law of England and Wales.

Accordingly, it is possible to:-

• Obtain proprietary injunctions in respect of crypto assets;
• Obtain worldwide freezing orders in support of claims relating to crypto fraud;
• Enforce judgments against crypto assets.

How are cases dealt with in the Courts of England and Wales, are there any defining features?

The Courts have developed significant expertise in dealing with crypto assets and it is possible to bring insolvency related claims in the Insolvency and Companies List in the High Court.

IPs can also consider bringing civil claims in the Courts and these are commonly dealt with in the London Circuit Commercial Court.

The most interesting and unique feature about these cases is that very often the party making the application will attend the Court without notice to the other side. This does mean that the decisions are not binding authorities per se but the Courts do generally follow an approach which is consistent with previous interim decisions.

What Issues arise when these cases are before the Courts?

The main issue which arises for an IP is to identify whether a crypto asset exists and if so, its whereabouts. This will often require the engagement of forensic blockchain investigators.

It is possible to obtain an injunction/judgment against “persons unknown” in appropriate cases.

When making an application for an injunction without notice, the applicant has a duty of full and frank disclosure and this Is particularly relevant to digital asset disputes, see the decision in Piroozzadeh -v- Persons Unknown, Binance and others [2023] EWHC 1024 (Ch).

IPs should act quickly in any action due to the potential volatility of crypto assets and the risk that these may fall in value or dissipated/destroyed which may affect the outcome of any action and the ultimate recoveries made.

I’m an overseas IP, what can I do in respect of crypto assets in England and Wales?

If you are an overseas IP and wish to recover crypto assets in England and Wales, then you may be able to make an application to the Courts in this jurisdiction for a Recognition Order pursuant to the terms of UNCITRAL Model Law.

Broadly speaking, this will be possible in the following cases:-

• Where the owner of the crypto assets can be said to reside in the jurisdiction;
• An underlying contract specifies that the matter is to be dealt with in the English Courts or English law applies;
• The assets are located here;
• Any losses are suffered in England and Wales.

If a Recognition Order is obtained, it will give access to remedies available to litigants before the Courts of England and Wales.

If you are located in certain countries, then you may alternatively be able to apply to the Courts of England and Wales for Assistance pursuant to $426 Insolvency Act.

The Courts will usually grant assistance and this will give the office holder the option to apply English law or the law of the country where the IP is appointed (this has the scope to broaden out the remedies available).

Alternatively, if you have obtained a judgment in an overseas Court already, it is an option to apply for this to be recognized in the Courts of England and Wales so that it can be enforced in this jurisdiction.

If you would like any advice on any of the issues raised in this article, then please contact Alice Lithgow to find out what steps can be taken on al@jamesedwardassociates.com or (020 7467 39986).

The information provided in this document does not, and is not intended to constitute legal advice. Instead, all information is for general informational purposes only. Should you wish to obtain legal advice in relation to the matters raised, please do not hesitate to contact us.

However if an employer agrees to provide a reference, whether it is verbal or written there is a duty to take reasonable care to ensure that the contents are true, accurate and fair and are not misleading. This duty of care relates not just to the departing or former employee but also to a prospective new employer who may be influenced by its content in deciding whether to make an offer of employment.

One question that often arises is whether an employer can provide a bad reference. The answer to this depends on whether it is true or not. The worst case scenario is where an employer provides an untrue bad reference out of malice that cannot be substantiated and the departing or former employee loses employment opportunities. In this situation the employee can sue for damages for financial loss or even defamation and possible unlawful discrimination.

Where an employee is dismissed and brings proceedings say for unfair dismissal and unlawful discrimination then the provision of an untrue and bad reference can be an aggravating factor and potentially classed as victimisation. The employment tribunal can take this into account when assessing any compensation.

Conversely employers can be sued by future employers who hire the departing or former employee as a direct result of a glowing reference that turns out to be untrue. There was a flux of case law in the 1990s where a number of former employers were successfully sued by former employees and new employers because they relied on references which turned out not to be true. Spring v Guardian Assurance plc and others [1994] IRLR 460 HL is one authority that springs to mind, where in extreme circumstances a former employee successfully sued his former employer for negligent misstatement which resulted in the loss of employment opportunities and where he was barred from the insurance industry.

For this reason many employers have now implemented a strict written policy on the provision of references. Many employers will now only provide a basic factual reference with no subjectivity. It is therefore common practice for many employers to provide minimal information for example just the dates of employment, job title and salary with no detail to as to how good or bad the employee was at their job.

It is also common practice for employers who do provide a reference to include a disclaimer of liability arising from any errors, omission or inaccuracies that may be contained. Disclaimers will generally be of limited effect however there is no real disadvantage to the employer by including one.

Some employers also have a policy not to provide references at all and this could imply that you have a problem with the departing or former employee. This in turn could lead to allegations that you are discriminating against them and have broken the mutual trust and confidence. It is therefore good practice to respond to each reference request and to back it up with a statement that it is not your policy as an organisation to give references.

Where the employment relationship breaks down and this results in a settlement agreement it is also customary for the employer to provide a reference as part of the deal. It is our experience that employers are usually only willing to provide the most basic and factual of references. It is better in these circumstances for the departing employee to attempt to secure a personal reference from a colleague who can perhaps vouch for the quality of their work and any contributions during the course of their employment.

It is also good practice to be consistent in the treatment of employees when providing references. Providing a reference to one employee but not another could result in a claim of unlawful discrimination giving rise to legal risk and costs.

Another issue is what happens if the departing or former employee wants to see the reference? The general principle is that you do not have to disclose the reference. However a new employer will have to disclose the reference if the former employer has consented to its disclosure and that it is reasonable in all the circumstances for the new employer to do so.

If you really do not want the reference to be disclosed to the departing or former employee then it is vital that you inform the prospective new employer that you do not consent to its disclosure or any confidential parts of it to the employee. It is obviously better to make this request in writing.

The Information Commissioner has also issued a Data Protection Good Practice note in relation to subject access and employment references. This suggests that in most circumstances the employer should provide the information in a reference to the person to whom it relates. Where the person who wrote the reference refused their consent to disclose the reference this will not justify withholding the information contained in the reference, especially where it has affected the individual’s ability to take up a job offer. The Information Commissioner also recognises that there may be circumstances where it would simply be inappropriate to divulge the details or to disclose the reference for example where there is a threat of violence and/or intimidation by the former employee towards the person who wrote the reference.

To summarise there is no right to a reference, except that employers need to ensure that it is true and accurate and on this basis it is a good idea to ensure that time and thought is given to the task to minimise any future risks.

If you have any issues relating to reference requests then contact Michael Stewart – Partner and Head of Employment. Tel: 020 7467 3988 E-mail: se@jamesedwardassociates.com