England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT

		Royal Courts of Justice, Rolls Building Fetter Lane, London, EC4A 1NL
		19/06/2015

Mr Justice Birss :

1. The business of Worldspreads Ltd was to provide an online trading platform to enable customers to carry out spread betting and to trade in contracts for differences. It was regulated by the FSA (now the FCA). The company is in special administration. Directions are sought to enable the joint special administrators, Jane Moriarty and Samantha Bewick, to finally distribute client money. That is a necessary step towards the completion and closure of the special administration. In this judgment I will refer to the joint special administrators as the administrators.
2. The legal context in which this arises is as follows. The company was an investment bank within the relevant statutory definition in s232 of the Banking Act 2009. One of the conditions which must be satisfied for that definition to apply is condition 2 which provides that the institution holds client assets (s232(3) and (4)). By s232(5A) client assets include money and there is no doubt the company held client money. Under s138 FSMA (now s137A), the FSA (now FCA) had power to make general rules governing the conduct of regulated activities, and under s 139(1) FSMA (now s137B) the FSA (now FCA) had power to make rules resulting in client money being held on trust. The applicable rules in this case are the Client Assets rules (CASS rules). The applicable CASS rules are CASS 7 relating to receiving and holding client money and CASS 7A relating to distribution. Client money is held on a statutory trust governed by the CASS rules. The relevant rule at the time was CASS 7.7.2. That has now been replaced by CASS 7.17.2.
3. Under the Banking Act regulations may be made to modify the law of insolvency as it applies to investment banks. These regulations are the Investment Bank Special Administration Regulations 2011 (IBSAR).
4. By an order made on Sunday 18^th March 2012 by Hildyard J the company was placed into special administration after it emerged that there was a substantial deficit in the client money which the firm ought to have held. The background is described in the judgment of Hildyard J [2012] EWHC 1263 (Ch).
5. Within the relevant CASS 7A rule (7A.2.2R(1)) the appointment of the special administrators was a "failure of the firm" and so was a "primary pooling event". This triggered the requirement to treat the client money as pooled and to distribute it under CASS 7A. Under the CASS rules the trustee of the statutory trust holding the client money is the company. Moreover although the client money pool falls outside the insolvent estate, the pool is under the control of the joint special administrators.
6. A feature of the special administration procedure is that one of the objectives of the special administrator is to ensure the return of client assets as soon as reasonably practicable (IBSAR regulation 10). IBSAR Regulation 11 relates to this objective and provides the special administrator may set a bar date for the submissions of claims to beneficial ownership in order to expedite the return of client assets. However by regulation 11(8) this provision does not apply to client assets which are governed by rules made by the FCA under s137B FSMA. Thus regulation 11 does not apply to client money because client money is covered by the CASS rules. I accept counsel's submission that this aspect of regulation 11 does not alter the overall terms of the objective defined in regulation 10 itself. In other words the objective to return client assets is applicable just as much to client money as other assets. It is just that regulation 11 does not apply to client money.
7. The difficulty is that there is no other provision in either IBSAR or the IBSAR Rules or in the general FCA rules and guidance which provides a procedure governing distribution of client money in a special administration.
8. The administrators seek an order from the court which will in effect create a procedure to deal with this problem. In summary the proposed order would permit the joint special administrators to set a bar date for outstanding claims, to make provision for costs and expenses, to deal with claims to client money which are not agreed and to make a final distribution to those with agreed money claims notwithstanding the potential claims of others who have not responded to communications from the administrators or not pursued a court application if their claim has been rejected by the administrators.
9. At this stage I should mention the Financial Services Compensation Scheme ("the FSCS"). Clients with claims in respect of client money are entitled to compensation up to a maximum of £50,000 from the FSCS. In return for an assignment of their claim to the FSCS, they receive 100p/£ up to the maximum limit. The FSCS stands in their shoes to receive any dividends from the client money pool and from the firm's estate.
10. The position of Worldspreads today is explained fully in the fourth witness statement of Ms Bewick, one of the administrators. It is as follows. There is a significant deficit in the client money pool. To the extent that there is a shortfall in the client money pool, clients are unsecured creditors of the firm. The administrators have identified and agreed the claims against the client money pool of 4865 clients, whose claims total £28.6 million. Of those, clients with claims totalling £27.45 million have assigned their claims to the FSCS. As a result, the FSCS holds some 95.8% of the total agreed claims. To date, there are 1085 clients with claims in aggregate of £1,196,675.75 who have not assigned them.
11. There are a further 10,662 clients of Worldspreads of whom the administrators are aware who have not responded to correspondence asking them to agree claims over the period of more than 3 years since the special administration order. Of that group, 9,230 have a 'nil' recorded balance and 1,216 have balances of £100 or less according to the firm's records. The administrators have also identified a further 41 clients who dispute their closing balance in the firm's records; of these, 38 are believed to have nil balances and 3 have balances totalling £3,084.40 in aggregate.
12. The gross claims of clients against the client money pool are put by the administrators at approximately £28.8 million.
13. On 21 November 2012, Floyd J gave directions to facilitate and permit the administrators to make interim distributions in respect of agreed client money claims (making prudent reservation against client money claims which had not been agreed). Since then the administrators have paid out 8p/£ in respect of agreed claims against the pool.
14. The administrators are now holding approximately £3 million. That sum includes about £2.6 million which had been held in the house estate but was transferred into the client money pool by the administrators following legal advice and in consultation with the firm's secured creditor. The administrators are in a position to distribute the £3 million to those entitled to claim against the client money pool, subject to proper costs and expenses. They anticipate a final distribution of the order of 10.3p/£.
15. The prospective return from the pool to clients with client money claims is therefore likely to be about 18.3p/£. Those clients will have an unsecured claim against the estate for the balance. Closing the client money pool will therefore also quantify the unsecured claims of those clients against the estate.
16. Ms Bewick explains that the administrators wish to be able to reach the stage when they can properly make a final distribution and close the client money pool. Ms Bewick explains the extensive attempts the administrators have made to contact the non responsive clients. She notes that the CASS 7A rules on distribution do not envisage the existence of non-responsive clients nor do they provide a mechanism for dealing with funds which would otherwise be due to clients but for their failure to submit a claim. She contends that the resulting impasse is not in the best interests of the special administration since it would necessarily have to remain open pending resolution of the unresolved claims. I agree. This state of affairs plainly does not accord with the objective in IBSAR regulation 10 of ensuring the return of client assets as soon as reasonably practicable.
17. The administrators approached the FCA and submitted a modification application to the FCA for modification of the relevant part of the CASS 7A rules. On 5^th June 2015 the FCA agreed to a proposed modification of the CASS 7A rules and issued a direction to that effect under s138A of FSMA. The modified rule applies only to Worldspreads and applies for a limited period, ending on 31^st December 2015. The full text of the modified form is attached to this judgment. The modified rule consists of new sub-paragraphs (2A) to (2E) in CASS 7A.2.4R(2). The modified rule permits the administrators to make a final distribution without regard to the client money entitlement of a client which has not submitted a proof provided the administrators take certain steps subject to a timetable. The steps are: to write to the client inviting them to submit a proof, advertise what is going to happen, and wait for at least certain periods of time. The modified rule also deals with de minimis claims (which would result in a distribution of not less than £1) and has provisions for record keeping and notification.
18. Importantly modified rule (2C) has the effect that once a final distribution of the client money pool has occurred, a client who is either a non-responder (sub-paragraph (2A)), or who has a de minimis claim (sub-paragraph (2B)), will cease to have an interest in the client money within the meaning of the relevant CASS 7 rule. This does not affect such a client's right (if any) as an unsecured creditor of the firm nor does it affect such a client's rights vis a vis the FSCS but it will mean that once the client money pool is finally distributed, a client who did not respond by the bar date will not have any proprietary claim against money which had been distributed from the client money pool.
19. Before me the administrators submit that while the modified rule issued by the FCA is important, from the point of view of the administrators it only provides that this course is open to them, it does not alter the fact that they should nevertheless come to court for directions. They submit that the court has jurisdiction to give such directions and to sanction the approach the administrators wish to take on two bases: first under paragraph 63 of Schedule B1 of the Insolvency Act 1986 (the Act) as applied to the special administration of Worldspreads by IBSAR, and second under the court's inherent jurisdiction in relation to trusts. The latter extends to a power to give directions to trustees to distribute trust property on particular bases when the court is satisfied it is just and expedient to do so, based on the judgment in In re MF Global UK Ltd (in special administration) (No 3) [2013] 1 WLR 3874.
20. Dealing with the first submission, in the context of conventional administration orders (i.e. not special administrations such as this one) paragraphs 59 to 75 of Schedule B1 of the Insolvency Act 1986 contain provisions dealing with the functions of an administrator. Paragraph 63 provides that the administrator may apply to the court for directions in connection with his functions. By regulation 15 (4) of IBSAR the provisions of Schedule B1 set out in Table 1 are applicable to a special administration with the modifications set out in that Table. In the entry in Table 1 for paragraph 63 of Schedule B1 there are no modifications or comments and so it applies to special administrations such as this one in unmodified form. I accept Mr Davis' submission that insofar as the application before me raises matters arising within the scope of the administrators' appointment under ISBAR, then the court has jurisdiction under paragraph 63 to give directions.
21. Paragraph 63 was the basis on which the court in November 2012 gave directions for an interim dividend but it was not necessary at that stage to deal with disputed claims or issues arising in the context of a final distribution from the client money pool. Whether the paragraph 63 jurisdiction would be sufficiently wide on its own to justify the final order sought is at least open to question. After all client money is not part of the insolvent estate. Moreover IBSAR regulation 11 does not cover client money (as opposed to other client assets) although client money is covered by the objective specified in IBSAR regulation 10. On the other hand it is obviously inherent in the appointment of a special administrator that they are likely to have to deal with client money given that the definition of investment bank in the Banking Act includes the requirement to hold client assets, including money. However this debate does not matter if the court's inherent jurisdiction applies too, following MF Global and I will turn to that question.
22. Apparently MF Global Ltd was the first example of a special administration order being made by the High Court in London. In the MF Global decision (above) David Richards J heard a very similar application to the one before me. The client money was held on the same statutory trust arising under the CASS rules (judgment paragraphs 4-8). The procedural context was slightly different in that it arose at an earlier stage before interim distributions had been made but that difference is not significant since the judge was considering distribution of the balance of the available funds (paragraph 13). As here, in MF Global, the special administrators needed a mechanism to deal with rejected claims and unknown claims which provided a degree of certainty and protection. Unless a procedure was put in place, even an elaborate scheme for dealing with rejected claims could not solve the problem of possible unknown claims.
23. The judge noted that the need for a process for dealing with these problems has been recognised in In Re Lehman Bros (No 2) [2010] Bus LR 489.
24. In paragraphs 25 to 32 David Richards J examined the possible jurisdictional bases which might be available. He held (paragraph 25) that there was no jurisdiction under the Trustee Act 1925 but went on to hold that the court's inherent jurisdiction to supervise and intervene in the administration of a trust did apply (paragraph 26). This does not enable the court to vary beneficial interests but it does permit the court to give directions to trustees to distribute trust property on particular bases when the court is satisfied it is just and expedient to do so. This extends to distribution notwithstanding the existence of claims or potential claims of third parties (paragraph 30) and in the context of a rejected claim to a beneficial interest (paragraph 31). I accept the submission of Mr Davis that the present case is on all fours with MF Global at the level of the principles to be applied. The court has jurisdiction to make the orders sought in this case.
25. There may be some differences in detail from the position in MF Global but these do not derive from the order I am asked to make. One distinction is that in MF Global all the claimants known to the special administrators had been notified of the application to the court. Mr Davis explained that that had not happened in the present case and invited me to endorse that approach in this particular case. He relies on the following. The sums involved here are very much smaller than the sums in MF Global, where the total value of the anticipated claims against the client money trust was estimated to be between US$1.107 billion and US$1.515 billion. All the known claimants have been informed about this proposal in general terms. There has already been an interim dividend. If the directions are given affected parties will be sent further notifications. Thus to add to the cost of this application by having a process of formal notification before coming to court would just add to the cost of the administration, in a case in which the fund is already heavily depleted, with no practical benefit. I accept that approach in this case.
26. At paragraph 32 of MF Global David Richards J explained why he regarded the directions he was being asked to make as appropriate:

"The purpose of the court's inherent jurisdiction is to enable practical effect to be given to a trust. As earlier mentioned, the purpose of the client money trust established by the CASS rules and the purpose of the client money distribution rules in CASS 7A is to protect the position of clients and to facilitate the timely return of client money in the event of the failure of the firm. These purposes are not well-served by long delays while at considerable expense claims, which have been made but not pursued, are finally determined through court proceedings. If those persons who have made claims are seriously concerned to pursue them, it will be open to them under the administrators' proposals to lodge an application with the court, in which event full provision will be made for their claims while they are litigated. In my judgment, these proposals properly balance both the interests of established clients to a timely return of their money and the interests of persons with serious but unresolved claims to be treated as clients."

27. The very same considerations described by David Richards J apply in the case before me. I am satisfied that:

i) the administrators have taken all reasonable steps to identify or notify all potential client money claimants. I note in particular the proposals for further advertisement and email contact with non-responsive clients;

ii) the proposals properly balance the interests of established clients to a timely return of their money with the interests of persons who may have serious but unresolved claims to be treated as clients with client money claims;

iii) it is in the best interests of the proper administration of the client money trust and in the best interests of the clients for an order to be made substantially in the form sought.

28. I turn to consider some further, wider, factors.
29. The full terms of the order sought are annexed to this judgment. If the order is made in the terms sought, there would be one further round of communications by email, and advertisement, to put clients on notice of what is intended. Where a client's claim is disputed, the administrators will rule on that and the client would have an opportunity to challenge that ruling before the court. Clients who have assigned their claims to FSCS have already been paid compensation. Any further clients with agreed claims who assign them to the FSCS would similarly receive compensation (up to the £50,000 maximum). Claims for shortfall would be provable (by the client, or by the FSCS where the claim has been assigned) against Worldspreads' insolvent estate.
30. Compared to the form of order in MF Global, the terms of this order are in what Mr Davis described as a more "lightweight" form. Be that as it may, this order gives directions to the administrators at an appropriate level of detail having regard to the magnitude of the sums available for distribution.
31. The Creditors Committee, which includes the Royal Bank of Scotland Plc (in its capacity as an unsecured creditor) and the FSCS, have been provided with copies of the proposed application, the evidence and proposed form of order. No objections have been received.
32. The FCA has been kept fully informed and was notified of the application. The FCA did not formally attend but a representative was present in court during the hearing. It is clear that the FCA supports the application.
33. I have therefore made the order as set out in Annex 2.
Annex 1 (FCA modified rule)

Handbook Version as in force at the date of this Direction

Power

34. This direction is given by the FCA under section 138A of the Act.

Duration

(1) This direction takes effect on 05 June 2015.

(2) This direction ends on 31 December 2015.

Rule modified

36. The FCA directs that the rule listed below applies to the firm with the modification shown:

Rule

Modification

CASS 7A.2.4R(2)

(2) the firm must: (a) distribute client money comprising a notional pool in accordance with CASS 7.17.2 R, so that each client who is a beneficiary of that pool receives a sum which is rateable to the client money entitlement calculated in accordance with CASS 7A.2.5 R; or (b) (where applicable) transfer client money comprising a sub-pool to effect or facilitate porting of positions held for the clients who are beneficiaries of that sub-pool; (2A) the firm may, in a final distribution of client money comprising the notional pool, make that distribution without regard to the client money entitlement of a client that has not submitted a client money proof but is shown in the firm's records (as at the time of that distribution) as having a client money entitlement, provided the firm takes the following course of action: (a) writing to the client, or having since 18 March 2012 written to the client, at the address held by the firm prior to the primary pooling event, or by sending an email to the email address held by the firm prior to the primary pooling event, inviting the client to submit a client money proof; (b) at least 21 days after the action in (2A)(a), ensuring that notice is placed in a prominent position on the website used by the firm's special administrators to communicate with the firm's clients, which remains there until the date of the final dividend paid from the general estate, and which states that: (i) the firm intends to distribute the client money comprising the notional pool without regard to the client money entitlement of clients that have not submitted a client money proof; (ii) clients who intend to submit a client money proof should do so within [21] days from the date of the notice; (iii) upon distribution of the client money comprising the notional pool and unless they have submitted a client money proof, those clients' interest in the client money comprising the notional pool will cease; (iv) provision is being made in the firm's general estate for creditor claims connected with those clients' client money entitlements; and (v) the client may in any case obtain administrative support from the firm to contact the FSCS in order to try to make a claim for full compensation for their client money entitlement from the FSCS; and (c) at least 21 days after the action in (2A)(a) (and which can therefore be carried out before, simultaneous to or after the action in (2A)(b)), in respect of any non-responsive client with a client money entitlement, writing to the client at the address held by the firm prior to the primary pooling event, or by sending an email to the email address held by the firm prior to the primary pooling event, informing the client that: (i) as the client has not submitted a client money proof, the firm intends to distribute the client money comprising the notional pool without regard to the client's client money entitlement; (ii) the client has 21 days from the date of the communication to submit a client money proof; (iii) upon distribution of the client money comprising the notional pool and unless the client submits a client money proof, the client's interest in the client money comprising the notional pool will cease; (iv) provision is being made in the firm's general estate for creditor claims connected with clients' client money entitlements; and (v) the client may in any case obtain administrative support from the firm to contact the FSCS in order to try to make a claim for full compensation for their client money entitlement from the FSCS; (d) waiting at least 21 days from the last attempted communication under (2A)(b) and (2A)(c). (2B) the firm may, in a final distribution of client money comprising the notional pool, make that distribution without regard to the client money entitlement of a client whose rateable sum for the final distribution arising from his client money entitlement is valued at less than £1, provided that the following conditions are fulfilled: (a) the firm writes to the client at the address held by the firm prior to the primary pooling event, or sends an email to the client to the last email address held by the firm prior to the primary pooling event, informing the client that: (i) the firm will draw and send a cheque for the client's dividend payment if the client responds by email within 42 days to confirm their wish to receive a cheque and a postal address for such purposes; (ii) in the event that the client either does not provide such confirmation, or does not present a received cheque for payment within six months of the cheque's date , the firm intends to distribute the client money comprising the notional pool without regard to the client's client money entitlement; and (iii) the client may in any case obtain administrative support from the firm to contact the FSCS in order to try to make a claim for full compensation for their client money entitlement from the FSCS; and (b) the firm either does not receive from the client a response expressing a wish to receive the cheque within 42 days of the firm's communication under (a) or, if a cheque was sent to them, the client has not presented the cheque for payment within six months of the cheque's date; (2C) upon a final distribution of client money comprising the notional pool in accordance with (2), (2A) and (2B), a client referred to in (2A) or (2B) ceases to have an interest in client money within the meaning of CASS 7.17.2R(2); (2D) the firm making a distribution of client money in accordance with (2), (2A) and (2B) must: (a) make and retain a record of: (i) the client money entitlement of each client that ceased to have interest in client money in accordance with (2C); and (ii) the amount of money that each such client would have received from the client money pool if it had submitted a proof, on the assumption that all clients received a sum rateable to their client money entitlement; and (b) retain all documents relevant to a contractual claim against the firm by the affected clients, for example, the prices at which the clients' positions were closed out; (2E) when the firm makes a final distribution of client money comprising the notional pool in accordance with (2), (2A) and (2B) it must notify the FCA as follows: (a) promptly after the distribution: (i) of the names of the clients referred to in (2A) or (2B) that ceased to have an interest in client money in accordance with (2C); and (ii) of the amount of money that each of those clients would have received from the client money pool if they had submitted a proof, on the assumption that all clients received a sum rateable to their client money entitlement; and (b) promptly after the distribution of the final dividend from the firm's general estate: (i) of the names of all clients referred to in (2A) of (2B) that ceased to have an interest in client money in accordance with (2C) and have made successful claims in relation to their client money entitlement against the general estate since the last notification; and (ii) of the amount of money paid to each such client; and ….

Conditions

37. This direction is conditional upon the firm:

(1) determining that the clients concerned (whose client money entitlements have been disregarded in the final distribution of client money comprising the notional pool as a result of CASS 7A.2.4R(2A) or (2B)) shall be permitted to prove for their full client money entitlement (the "Shortfall Claim") in the general estate;

(2) with respect to the clients referred to in CASS 7A.2.4R (2A), making provision in the firm's general estate to pay dividends (at the prevailing dividend rate at the time of such payments) in respect of the clients' Shortfall Claims; and

(3) retaining such provision for the purpose of paying dividends as set out in condition (2) and in accordance with the Investment Bank Special Administration Regulations 2011, the Investment Bank Special Administration (England and Wales) Rules 2011, the Insolvency Act and the Insolvency Rules (as appropriate), until the date of the final dividend paid from the general estate, at which point any such provision will be released.

Interpretation

38. Interpretative provisions (including definitions) of the Handbook apply to this direction in the same way they apply to the Handbook.
Annex 2: the order in its final form (apart from definitions)
39. The definitions in Regulation 2 are to apply for the purposes of this Order, together with the following further definitions:

[table of definitions]

40. The Joint Special Administrators are at liberty:

2.1. to set a date by which any Unnotified Client Money Claims must be notified to them (a "Bar Date");

2.2. to advertise the Bar Date in such publications as they reasonably believe will result in the advertisements being likely to come to the attention of any Clients who may have Unnotified Client Money Claims, and to give notice of the Bar Date to the FCA and the FSCS;

2.3. to correspond by email on at least one more occasion with Unresponsive Clients to notify them individually of the Bar Date.

41. After the Bar Date, the Joint Special Administrators are at liberty:

3.1. to make provision from the Client Money Trust for the costs and expenses properly to be paid from that trust pursuant to paragraph 10 of the order of Mr Justice Floyd dated 21 November 2012 and paragraph 10 of this Order;

3.2. to make provision for any Unagreed Client Money Claims and the reasonably estimated costs of dealing with them;

3.3. to determine any Unagreed Client Money Claims as if they were adjudicating on a proof in the Special Administration, for which purpose:

3.3.1. the rules in Chapter 2 of Part 6 of the Special Administration Rules shall apply to the procedure for notification of a Client Money Claim by or on behalf of a Client and the determination of the amount of that Client Money Claim by the Joint Special Administrators;

3.3.2. any Client who is dissatisfied with the Joint Special Administrators' decision with respect to a Client Money Claim has liberty to apply to the Court for the decision to be reversed or varied, and rule 157 of the Special Administration Rules shall govern the procedure for such application;

3.3.3. the Joint Special Administrators shall deliver a copy of this Order and draw attention to paragraph 3.3.2 above on any occasion when they notify a person of a decision that a Client Money Claim has been rejected in whole or in part.

42. The Joint Special Administrators are at liberty:

(a) to announce and pay a further interim distribution or distributions from the Client Money Trust;

(b) when they are satisfied that all Client Money Claims of which they are aware have been agreed or have been determined by the Court pursuant to paragraph 3.3.2 above, and that no further provisions need be made by them in respect of Client Money Claims, and that not less than 28 days have passed since the last day on which they notified to a person who had made a Client Money Claim that that person's Client Money Claim has been rejected, and that no application to the Court pursuant to paragraph 3.3.2 is pending, to announce and pay a final distribution from the Client Money Trust;

to:

4.1. those Clients with an Agreed Client Money Claim which has not been Assigned, subject to paragraph 5.4 below;

4.2. the FSCS, rateably to the aggregate amount of the Agreed Client Money Claims which have been Assigned.

43. Subject to compliance with CASS Rule 7A.2.4R as modified in respect of Worldspreads by the FCA Direction dated 5 June 2015 and the conditions set out in that Direction, the Joint Special Administrators are at liberty to pay pursuant to paragraph 4 of this Order an interim distribution, and when the conditions in paragraph 4(b) of this Order are satisfied, a final distribution, on the footing that:

(1) there are no Clients with a Client Money Entitlement other than those Clients with an Agreed Client Money Claim and (in the case of an interim distribution) those Clients who have notified the Joint Special Administrators of a Client Money Claim which has not been determined by the Joint Special Administrators as at 5pm on the day prior to the date fixed by them for paying a distribution;

(2) any Client who had an account with Worldspreads which the records of Worldspreads show as having a 'nil' balance as at the date of the Order does not have a Client Money Entitlement unless the Joint Special Administrators have determined that such record was incorrect and agreed a Client Money Claim for that Client;

(3) the Joint Special Administrators may disregard, in making the final distribution, the possible Client Money Claims of Unresponsive Clients;

(4) the Joint Special Administrators may disregard, in making the final distribution, any Client Money Claim which would result in a De Minimis Distribution;

(5) any person claiming a Client Money Entitlement whose Client Money Claim has been rejected and who has not filed an application to the Court pursuant to the liberty to apply in paragraph 3.3.2 of this Order and given notice of the filing of that application to the Joint Special Administrators by 5pm on the day prior to the date fixed by them for paying a distribution does not have a Client Money Entitlement;

(6) any Client Money Claimant whose Client Money Claim has been accepted as to part but rejected as to part (the "rejected part") and who has not filed an application with the Court pursuant to the liberty to apply in paragraph 3.3.2 of this Order and given notice of the filing of that application to the Joint Special Administrators by 5pm on the day prior to the date fixed by them for paying a distribution does not have a Client Money Entitlement in respect of the rejected part.

44. If and insofar as the Joint Special Administrators act or cause Worldspreads to act in accordance with this Order, neither Worldspreads nor the Joint Special Administrators shall be liable, with regard to any distribution from the CMP, to any Client:

(1) with an Unnotified Client Money Claim as at 5pm on the day prior to the date fixed by them for paying a distribution; or

(2) whose Client Money Claim has been notified to the Joint Special Administrators and who has been notified by them that the Client Money Claim has been rejected, where it is later established (by agreement or by the Court) that the Client did have a Client Money Entitlement, but who had failed to file an application with the Court pursuant to the liberty to apply in paragraph 3.3.2 of this Order and give notice of the filing of that application to the Joint Special Administrators by 5pm on the day prior to the date fixed by them for paying a distribution; or

(3) whose Client Money Entitlement is later established (by agreement or by the Court) to be greater than the part of its Client Money Claim which has been accepted by the Joint Special Administrators, but who had failed to file an application with the Court pursuant to the liberty to apply in paragraph 3.3.2 of this Order and give notice to the Joint Special Administrators of the filing of such application by 5pm on the day prior to the date fixed by them for paying a distribution.

45. Any interim distribution from the Client Money Trust in accordance with paragraph 4 of this Order shall be without prejudice to any entitlement of Clients falling within any of paragraphs 6(1), (2) or (3) above:

7.1. to participate in any subsequent distribution from the Client Money Trust; and/or

7.2. to pursue a claim, if any such claim is otherwise available to them (without acknowledging any such claim), to follow or trace and claim against Clients in receipt of any part of the relevant distribution from the Client Money Trust made prior to the agreement or establishment of their claim.

46. Nothing in this Order shall prejudice any right of a client to prove for a proper claim in the Special Administration as an unsecured creditor, nor a client's ability to receive compensation from the FSCS.
47. The Joint Special Administrators shall act in accordance with this Order solely as agents of Worldspreads in its capacity as trustee of the Client Money Trust, and nothing in this Order or in determining Client Money Claims or distributing the money held on the Client Money Trust in accordance with this Order shall result in the Joint Special Administrators assuming personal liability as trustees.
48. The costs of and occasioned by the Application, to be assessed if not agreed by the Creditors' Committee, shall be paid as costs properly attributable to the distribution of the Client Money Trust within the meaning of CASS 7.17.2R(4).