Category: Insolvency

Swallow v Mashreqbank Psc: ChD 6 Dec 2021

Principles that the Court should apply when assessing evidence put forward in opposition to a statutory demand for a debt, which is intended to show that there is a substantial ground for disputing it.

Jon Turner QC Sitting as a Deputy High Court Judge
[2021] EWHC 3265 (Ch)
Bailii
England and Wales

Insolvency

Updated: 01 January 2022; Ref: scu.670317

Costley-Wood and Others v Rowley and Another (Re Patisserie Holdings Plc and Others): ChD 3 Dec 2021

Whether non-compliance with requirements of Schedule B1 to the Insolvency Act 1986 (‘Sch. B1’ and ‘the Act’) affected the subsequent validity and/or conduct of the administrations and subsequent liquidations.

Insolvency and Companies Court Judge Jones
[2021] EWHC 3205 (Ch)
Bailii
England and Wales

Insolvency

Updated: 31 December 2021; Ref: scu.670316

Zavodnik v Slovenia: ECHR 21 May 2015

ECHR Article 6-1
Fair hearing
Lack of proper notification of insolvency proceedings: violation
Facts – In 1997 a labour court ordered a private company to pay the applicant the salary due and applicable benefits (approximately EUR 8,350). In 1999 the judgment became final. In 2000 bankruptcy proceedings were instituted against the company. In 2005 the applicant’s claims were recognised in the bankruptcy proceedings. The receiver and the insolvency panel assured the applicant that they would inform him of progress in the case, in particular of the scheduling of hearings concerning the distribution of the estate. In 2008 a hotel complex belonging to the company was sold at public auction. Reports on the sale were published online on a web portal for accountants, on the Slovenian Press Agency website and in a daily financial newspaper. After the sale, in June 2008 the insolvency panel of the district court endorsed a draft proposal on the distribution of the bankrupt company’s estate to the 19 remaining creditors. It was proposed that they should each receive 2.85% of the claim acknowledged in the proceedings, which in the applicant’s case amounted to EUR 237. The court scheduled a further hearing in September 2008 to confirm the distribution of the estate. The district court published its decision and posted the notification of the hearing on the court’s notice board. The notification of the hearing, with its date and venue, was also published in the Official Gazette. At the hearing the district court confirmed the receiver’s distribution proposal. Its decision was posted on the court’s notice board the next day and could have been challenged within eight days. As no appeal was lodged against that decision, it became final. In November 2008 the bankruptcy proceedings were terminated. In December 2008 the applicant appealed against the decision to terminate the bankruptcy proceedings. He argued that he had not been properly informed of the September hearing on the distribution of the estate and that he should have been awarded the full amount claimed in the bankruptcy proceedings. In 2009 his appeal was dismissed and his constitutional complaint rejected.
Law – Article 6 – 1: The rules on service of summonses and decisions by posting on the court’s notice board and publication in the Official Gazette served the legitimate aim of ensuring that bankruptcy proceedings were expeditious and efficient. The rationale behind dispensing with personal service was that this type of proceedings might involve large numbers of creditors and parties. The personal service of court documents could add substantially to the costs of proceedings and, moreover, hamper their course if unsuccessful. However, under the domestic law, the hearing on the distribution of the estate represented a crucial point in the proceedings. Up to that point, the creditors could challenge the official receiver’s proposal for the distribution of the estate. They were precluded from doing so at a later stage. In that connection, the eight-day time-limit for lodging an appeal against the decision on distribution was relatively short. The applicant had been a party to the proceedings in which it had taken more than eight years for a hearing on the distribution of the bankruptcy estate to be scheduled. At that point, there had been only 19 creditors left whose names should have been known to the court. In addition, the applicant, who was not represented by a lawyer, had argued that he had been assured by the receiver that he would be informed of any progress in the proceedings. Bearing in mind the rather low number of creditors in the proceedings, the Court saw no reason why the applicant should not have trusted the receiver. Lastly, while the domestic law indeed did not provide for the personal service of summonses and court decisions in bankruptcy proceedings, it did provide for the possibility of publishing the notification of the hearing on the distribution of the estate also in the mass media. The Court regretted that in the instant case the domestic court had failed to use the latter publication option. The Court could not follow the Government’s argument that the applicant should have known about the sale of the hotel complex from online media reports. The media concerned could not be considered to have been targeted at the general public and/or to have reached the applicant (contrast Geffre v. France (dec.), 51307/99, 23 January 2003), an elderly person who said that he was unable to use a computer or access the internet. It would be unrealistic to expect the applicant to regularly consult the notice board of a court located in a different town from his place of residence or to gain access to every issue of the Official Gazette. In the circumstances, the Court was unable to conclude that the applicant had had a fair opportunity to have knowledge of the hearing on the distribution of the estate and that his failure to take part in the proceedings was due to a lack of diligence on his part (contrast Canete de Goni v. Spain, 55782/00, 15 October 2002). Moreover, it would not have been disproportionate to require the State to take additional steps to ensure that the few parties left in the proceedings, including the applicant, were informed of the hearing on the distribution and the decision taken at the hearing. By being deprived of the opportunity of taking part in the hearing of 10 September 2008, the applicant had been prevented from challenging the receiver’s plan for the distribution of the estate and thus from vindicating his right to obtain a higher percentage of his claim for unpaid wages.
Conclusion: violation (unanimously).
The Court also found a violation of Articles 6 – 1 and 13 on account of the length of the proceedings and ineffectiveness of remedies in this respect.
Article 41: EUR 12,500 in respect of non-pecuniary damage; claim in respect of pecuniary damage dismissed.

53723/13 – Legal Summary, [2015] ECHR 533
Bailii
European Convention on Human Rights
Human Rights

Human Rights, Insolvency

Updated: 30 December 2021; Ref: scu.547593

LB Holdings Intermediate 2 Ltd, (The Joint Administrators of) and Others v Lomas and Others: CA 14 May 2015

Applications after recovery of surplus funds to repay creditors of Lehmann Brothers Ltd. The court had given orders as to the several uses of the surpluses. The parties appealed some elements of those orders.
Held: Most elements were upheld, but some varied.
Lewison LJ pointed out at when paying the interest, the administrator acts as agent of the company pursuant to paragraph 69 of Schedule B1, and, as in the case of a company in liquidation, legal title to the assets from which the interest is paid remains vested in the company.
Briggs LJ said that, although ‘the statutory scheme provides no detailed machinery for dealing with’ non-provable liabilities, ‘they have always been dealt with in accordance with Judge-made principles’.

Moore-Bick VP CA, Lewison, Briggs LJJ
[2015] EWCA Civ 485, [2016] Ch 50, [2015] BPIR 1035, [2015] BCC 431, [2015] 3 WLR 1205, [2015] WLR(D) 218, [2015] 2 BCLC 433
Bailii, WLRD
Insolvency Act 1986
England and Wales
Citing:
At ChD – Re Lehman Brothers International (Europe) and Others ChD 14-Mar-2014
On the winding up of the company, there had unexpectedly been a surplus of assets after payment of all debts. The court was now asked to determine claims to be allowed before a distribution was made.
Held: The court made declarations as . .

Cited by:
At CA – LB Holdings Intermediate 2 Ltd, The Joint Administrators of v Lehman Brothers International (Europe), The Joint Administrators of and Others SC 17-May-2017
In the course of the insolvent administration of the bank, substantial additional sums were received. Parties appealed against some orders made on the application to court for directions as to what was to be done with the surplus.
Held: The . .

Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 30 December 2021; Ref: scu.546770

Olympic Airlines Sa Pension and Life Assurance Scheme, The Trustees of The v Olympic Airlines Sa: SC 29 Apr 2015

The airline was incorporated in Greece but with an office in the UK. It became insolvent leaving a deficit in the UK employee pension scheme. The trustees of the fund sought a secondary insolvency within the UK, and now a reference to the European Court.
Held: The Court was now asked what connection must a foreign company have with the United Kingdom to entitle an English court to wind it up, if its centre of main interests is in another member state of the European Union. The answer depended on the meaning of two words, ‘economic activity’, in the Insolvency Regulation of 2000. The law had altered after the CA decision that the airline’s activities within the UK did not count.
Held: The appeal failed. The necessity for showing at least some subsisting business with third parties before the definition can be satisfied is acte clair, even if the exact nature of that business and the degree to which it must be visible to outsiders may be open to argument. Since in this case no external business at all was carried on from 11 Conduit Street, there is no point of principle calling for a reference.

Lord Neuberger, President, Lord Mance, Lord Sumption, Lord Reed, Lord Toulson
[2015] UKSC 27, [2015] WLR(D) 203, [2015] 2 All ER (Comm) 393, [2015] ILPr 42, [2015] 1 WLR 2399, [2015] BCC 404, [2015] 3 All ER 694, [2015] 1 BCLC 589, [2015] Pens LR 417, UKSC 2013/0158
Bailii, WLRD, Bailii Summary, SC, SC Summary
EU Regulation 1346/2000 3, Insolvency Act 1986 221
England and Wales
Citing:
At First Instance – Olympic Airlines Sa Pension and Life Assurance Scheme v Olympic Airlines Sa ChD 29-May-2012
Olympic Airlines, incorporated in Greece, but with headquarters in London, went into liquidation. The pensions scheme had been run with a deficit. The trustees no sought the winding up of the company under British law.
Held: To be an . .
Appeal from – Olympic Airlines Sa Pension and Life Insurance Scheme v Olympic Airlines Sa CA 6-Jun-2013
The court considered the the jurisdiction under EU law to commence a secondary winding-up in England of a company whose main liquidation is taking place in Greece. That depended upon whether the company, registered in Greece had a sufficient . .
Cited – Shierson and Another v Tomlinson and Another CA 26-Mar-2002
A company had entered into a voluntary arrangement with its creditors, but subsequently went into liquidation. There was then a dispute as to the destination of sums held under the arrangement.
Held: Such arrangements created trusts. Whether . .
Cited – Trillium (Nelson) Properties Ltd v Office Metro Ltd ChD 9-May-2012
Winding-up petition in which the principal issue is whether or not Office Metro Limited can be wound up in this jurisdiction in the light of the fact that, despite its being an English registered company, its centre of main interest is in . .
Cited – Interedil Srl, in liquidation v Fallimento Interedil Srl, Intesa Gestione Crediti SpA ECJ 20-Oct-2011
interedill2ECJ2011
ECJ Reference for a preliminary ruling – Whether a lower court has the power to refer a question to the Court for a preliminary ruling – Regulation (EC) No 1346/2000 – Insolvency proceedings – International . .

Lists of cited by and citing cases may be incomplete.

European, Insolvency

Updated: 29 December 2021; Ref: scu.546150

Lutz v Bauerle: ECJ 16 Apr 2015

ECJ Judgment – Reference for a preliminary ruling – Regulation (EC) No 1346/2000 – Articles 4 and 13 – Insolvency proceedings – Payment made after the date on which insolvency proceedings were opened on the basis of attachment carried out before that date – Action to set aside an act detrimental to the interests of the creditors – Limitation periods or other time-bars relating to actions to set transactions aside – Procedural requirements for the action – Applicable law

A. Tizzano, P
C-557/13, [2015] EUECJ C-557/13
Bailii
Regulation (EC) No 1346/2000 4 13

European, Insolvency

Updated: 29 December 2021; Ref: scu.545446

Heis and Others v MF Global UK Services Ltd: ChD 31 Mar 2015

The parent company and its service company had gone into insolvent administration. The service company had seconded most of its employees to e main company and its administrators now sought an indemnity against the service company’s liabilities under the 1995 Act from the main company.
Held: The service was entitled to an indemnity as requested on the basis of an implied contract.

David Richards J
[2015] WLR(D) 153, [2015] EWHC 883 (Ch)
Bailii, WLRD
Pensions Act 1995 75
England and Wales

Insolvency

Updated: 29 December 2021; Ref: scu.545005

Thomas Wardlaw v Robert Gray: SCS 11 Jul 1611

Breach of Arrestment. Arrestment being laid, the party to whom the goods pertains, or in whose hands they are arrested, having received a copy, or ticket of the arrestment, and thereafter intromitted with the goods, the arrestment not being orderly loosed, may be pursued for breaking, of the arrestment, and consiscation of his goods, and punishment of his person. But, another party who had no knowledge of the arrestment, meeting therewith, may only be pursued to make the goods furthcoming.

[1611] Mor 786
Bailii

Scotland, Insolvency

Updated: 28 December 2021; Ref: scu.544316

Speir v Mure and Mureson: SCS 18 Dec 1611

Arrestments near in date, where each party had used due diligence were ranked pari passu. A party being obliged to two several creditors, whose bonds, registrations, inhibitions, and arrestments, are near one date, and used with all diligence:–The Lords, when they contend for making the goods furthcoming, will ordain the sum arrested by them to be divided amongst them pro rato debiti proportionally

[1611] Mor 808
Bailii

Scotland, Insolvency

Updated: 28 December 2021; Ref: scu.544319

Horton v Henry: ChD 17 Dec 2014

The trustee in bankruptcy sought to oblige the bankrupt to make a capital draw on pension fund assets in order to support an Income Payment Order.
Held: The judge dismissed the application for an IPO. The court had no power under section 310 of the 1986 Act to make an income payments order in respect of an uncrystallised pension not yet in payment: i) the word ‘entitled’ in section310(7) of the Insolvency Act suggested a reference to a pension in payment under which definite amounts had become contractually payable;
ii) there was no obvious wording in section 310 of the Insolvency Act which would give the Court power to decide how a bankrupt was to exercise the different elections open to him under an uncrystallised SIPP or personal pension; nor was there any obvious route for a trustee in bankruptcy to be said to have the power;
iii) that interpretation was supported by various commentaries, in particular the Report of the Pension Law Review Committee (Cm 2342-I), the Explanatory Notes to the WRPA and the Insolvency Service’s guidance notes as they were prior to Raithatha.
If, contrary to his decision, he had jurisdiction to make an IPO in respect of the pension entitlement, on the facts of this case, it would have been appropriate to make an IPO to the full extent claimed because, on the respondent’s own evidence, none of the moneys were needed for meeting his reasonable domestic needs or those of his family.

Englehart QH
[2014] EWHC 4209 (Ch), [2015] 1 WLR 2488, [2014] WLR(D) 551, [2015] BPIR 313, [2015] Pens LR 59
Bailii, WLRD
Insolency Act 1986 310
England and Wales
Citing:
Not followed – Raithatha v Williamson ChD 4-Apr-2012
A bankrupt’s present entitlement to compel payment of pension benefits fell to be included in the assessment of his income within the meaning of section 310(7) of the Insolvency Act. . .

Cited by:
Cited – Horton v Henry CA 7-Oct-2016
No obligation on bankrupt to draw on pension fund
The trustee in bankruptcy appealed against a decision dismissing his application for an income payments order pursuant to section 310 of the 1986 Act in respect of income which might become payable to the respondent from his personal pension . .

Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 27 December 2021; Ref: scu.541761

Salford Estates (No2) Ltd v Altomart Ltd: CA 8 Dec 2014

The issue on this appeal is whether, and if so in what way, the stay provisions in section 9 of 1996 Act apply to a petition to wind up a company on the ground of its inability to pay its debts where the debt on which the petition is based arises out of contract containing an arbitration agreement.

Sir Terence Etherton, Longmore, Kitchin LJJ
[2014) EWCA 1575 Civ
Bailii
Arbitration Act 1996 9
England and Wales

Arbitration, Insolvency

Updated: 24 December 2021; Ref: scu.539765

H v HK: ECJ 4 Dec 2014

(Judgment) Reference for a preliminary ruling – Area of freedom, security and justice – Judicial cooperation in civil matters – Jurisdiction of the courts of a Member State in which insolvency proceedings have been opened for an action in respect of insolvency against a defendant domiciled in a non-member State – Action brought against the managing director of a company for reimbursement of payments made after that company has become insolvent or after it has been established that its liabilities exceed its assets)

A. Borg Barthet P
C-295/13, [2014] EUECJ C-295/13
Bailii

European, Insolvency

Updated: 24 December 2021; Ref: scu.539595

Trillium (Nelson) Properties Ltd v Office Metro Ltd: ChD 9 May 2012

Winding-up petition in which the principal issue is whether or not Office Metro Limited can be wound up in this jurisdiction in the light of the fact that, despite its being an English registered company, its centre of main interest is in Luxembourg. The question which was to be determined was whether or not it had an ‘establishment’ in this country for the purposes of the Insolvency Regulation.
Mann J explained what amounted to economic activity within the meaning of the Regulation: ‘ However, I do not think that it amounts to economic activity within the meaning of the Regulation. By the time of the petition it seems that the only ‘activity’ (and I deliberately put it in inverted commas) was to sit there being liable on guarantees, sometimes paying out on them, and perhaps doing whatever else was necessary to keep itself alive in terms of compliance with formalities such as company filings. Mr Wetheral (or perhaps his staff) occasionally sought legal or accounting advice, but there is no evidence it was doing anything else. Being in a state of liability, with the need sometimes to pay out on that liability and take a bit of advice, is not an economic activity for the purposes of the Regulation. Neither is seeking accounting or legal assistance on other matters. Forwarding post (which is said to have happened at Chertsey) is not an economic activity carried on there. It is something which goes on so that someone can carry it on somewhere else. Utilising the guidance given in the Virgos-Schmit report, it is not conducting activities on the market.
The activities necessary for compliance (filing and so on) are not, apparently, carried out at the Chertsey office. They are therefore not carried out at the only candidate for a place of operations.
Even if I am wrong as to whether Office Metro’s residual activities are economic activity for the purposes of the Regulation, I do not consider that they are non-transitory. They are not a consistent activity. The activities involved in paying up on guarantees do not have the character of a consistent business or business-type activity. They arise as and when needed, and were all going well in the underlying group they would not arise at all. The concept of ‘establishment’ is the one chosen as the touchstone of sufficient presence to justify the opening of insolvency proceedings. There are three ingredients for these purposes: (i) a place where things happen, and (ii) sufficient things (iii) of sufficient quality happening there. The concept of non-transitoriness goes to the third of them. In my view the converse of something being transitory is not confined merely to things which are ‘fleeting’ (to use one English synonym) but is also intended to encapsulate such things as the frequency of the activity; whether it is planned or accidental or uncertain in its occurrence; the nature of the activity; and the length of time of the activity itself. When measured against all these elements I consider that the activities of procuring payment on the guarantees is transitory (or not non-transitory) for the purposes of the Regulation. This is to a large extent a value judgment in respect of which one cannot be prescriptive of the elements to be fulfilled (or not fulfilled), but in my view it is plain that if the activities were otherwise economic activities they would, for these purposes, be ‘transitory’ for the purposes of the Regulation.’

Mann J
[2012] EWHC 1191 (Ch), [2012] ILPr 30, [2012] BCC 829, [2012] BPIR 1049
Bailii
EU Regulation 1346/2000 3
England and Wales
Cited by:
Cited – Olympic Airlines Sa Pension and Life Assurance Scheme v Olympic Airlines Sa ChD 29-May-2012
Olympic Airlines, incorporated in Greece, but with headquarters in London, went into liquidation. The pensions scheme had been run with a deficit. The trustees no sought the winding up of the company under British law.
Held: To be an . .
Cited – Olympic Airlines Sa Pension and Life Insurance Scheme v Olympic Airlines Sa CA 6-Jun-2013
The court considered the the jurisdiction under EU law to commence a secondary winding-up in England of a company whose main liquidation is taking place in Greece. That depended upon whether the company, registered in Greece had a sufficient . .
Cited – Olympic Airlines Sa Pension and Life Assurance Scheme, The Trustees of The v Olympic Airlines Sa SC 29-Apr-2015
The airline was incorporated in Greece but with an office in the UK. It became insolvent leaving a deficit in the UK employee pension scheme. The trustees of the fund sought a secondary insolvency within the UK, and now a reference to the European . .

Lists of cited by and citing cases may be incomplete.

Insolvency, Jurisdiction

Leading Case

Updated: 23 December 2021; Ref: scu.457573

Ponsford, Baker and Co v Union of London and Smith’s Bank: CA 1906

Was a debtor who had committed an act of bankruptcy but who had not yet been adjudicated bankrupt free to require his secured creditor, who had notice of it, to hand over his securities on payment of the amount due thereon?
Held: He could not. This was the consequence of the debtor having incapacitated himself from tendering the money. ‘If such receiving order be made the whole of the assets vest in his trustee as from the date of the act of bankruptcy.’ The consequences were that during the period of relation back the bankrupt had no right to deal with his assets and could give no title in them to any transferee with notice; nor could he collect his debts or give a valid discharge for them, and anyone making a payment to him with notice of the act of bankruptcy acted at his peril. ‘But these statutory provisions have been enacted for the benefit only of the creditors of the bankrupt, and not for the benefit of his creditors.’

Fletcher-Moulton LJ
[1906] 2 Ch 444
England and Wales
Cited by:
Cited – Re Dennis (A Bankrupt) CA 22-May-1995
A joint tenancy was severed (under the former law) on the event of an act of bankruptcy, and not only by the later actual adjudication of bankruptcy. The vesting of the debtor’s property in the trustee which occurred on adjudication was automatic; . .

Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 22 December 2021; Ref: scu.186761

T and N Limited, Associated Companies of T and N Ltd (In Administration) v Royal and Sun Alliance Plc, and others: ChD 9 May 2003

T and N had exposure to asbestosis claims; these claims were insured by Lloyd’s but on terms that if payments were to be made, T and N should make certain reimbursements to Lloyd’s. T and N then insured with a captive company known as Curzon their liability to make such reimbursements. Lloyd’s called on T and N to make such reimbursement and when T and N became insolvent claimed that the right of recovery from Curzon became transferred to them (Lloyd’s) so that they could claim against Curzon under the 1930 Act.
Held: What was insured was the non-payment of a contract debt due from T and N to Lloyd’s and that such non-payment was not covered by the 1930 Act.

Mr Justice Lawrence Collins
[2003] EWHC 1016 (Ch)
Bailii
Third Parties (Rights Against Insurers) Act 1930
England and Wales
Citing:
See also – Royal and Sun Alliance Insurance Plc and Another v T and N Ltd CA 30-Dec-2002
Appeal against case management directions. . .
Followed – Tarbuck v Avon Insurance Plc ChD 2002
Legal expenses insurance was purchased by a Miss Nicholson who ran a Natural Health Clinic in Clerkenwell. The insurance was called an ‘Office or Surgery Policy’ and section 7, headed ‘Legal Expenses’, provided that the insurers would pay the . .
Cited – Hirachand Punamchand v Temple CA 1911
The defendant, a British army officer in India, had given a promissory note to the plaintiff moneylenders. Unable to pay, he suggested they apply to his father, Sir Richard Temple. In reply, Sir Richard Temple’s solicitors wrote saying they were . .

Cited by:
See also – Royal and Sun Alliance Insurance Plc and Another v T and N Ltd CA 30-Dec-2002
Appeal against case management directions. . .
Limited – First National Tricity Finance Ltd v OT Computers Ltd; In re OT Computers Ltd (in administration) CA 25-May-2004
The company had gone into liquidation. They had sold consumer policies as extended warranties on behalf of the claimant. The company had insured its own joint liability under the contracts, and the claimant sought information from the company’s . .
See Also – Re Tand N Ltd and Others ChD 21-Oct-2004
. .
See Also – Alexander Forbes Trustee Services Limited and Another v Jackson and Others ChD 2-Nov-2004
. .
See Also – Freakley, Gleave, Squires, T&N Limited v Centre Reinsurance International Company, Muenchener Rueckversicherungs-Gesellschaft, European International Reinsurance Company Limited, Curzon Insurance Limited ChD 26-Nov-2004
. .
See Also – T and N Ltd and Others, Re the Insolvency Act 1986 (Communications) ChD 8-Dec-2004
. .
See Also – In re T and N Ltd and Others, Re Insolvency Act 1986 ChD 14-Dec-2005
The court considered the case of Glenister and similar and said: ‘I accept the submission that these cases are not in point to the issue as regards future asbestos claims. There is no element of discretion as regards such claims. If the ingredients . .
See Also – T and N Ltd and Others, In the Matter of the Insolvency Act 1986 ChD 21-Dec-2005
. .
See Also – T and N Ltd and others v In the Matter of the Insolvency Act 1986 (Conflict of Law) ChD 21-Dec-2005
. .
See Also – In the Matter of T and N Limited and others ChD 12-Apr-2006
. .

Lists of cited by and citing cases may be incomplete.

Insolvency, Litigation Practice

Updated: 21 December 2021; Ref: scu.183727

OT Computers Ltd v Infineon Technologies Ag and Another: CA 14 Apr 2021

‘This appeal is concerned with the words ‘until the plaintiff has discovered the . . concealment . . or could with reasonable diligence have discovered it’ in section 32(1) of the Limitation Act 1980. Specifically, how does that section apply when the defendant deliberately conceals a relevant fact so that (1) it cannot reasonably be discovered by the claimant at the time of the concealment, (2) by the time it could be discovered by a person carrying on business of the relevant kind (here, the assembly and sale of computers), the claimant is in administration, and (3) the matters which would have put a person who continued to carry on such a business on notice of the need for further enquiry would not have come to the notice of a reasonably diligent insolvency practitioner?’

Lord Justice Males
[2021] EWCA Civ 501, [2021] 3 WLR 61, [2021] QB 1183
Bailii
Limitation Act 1980 32(1)
England and Wales

Limitation, Insolvency

Updated: 21 December 2021; Ref: scu.661906

Parva Investitsionna Banka And Others v Ear Proparti Developmant – v nesastoyatelnost: ECJ 9 Sep 2014

ECJ Order Of The Court – Reference for a preliminary ruling – Regulation (EC) No 1896/2006 – Definition of ‘uncontested pecuniary claims’ – Insolvency proceedings – Extra-judicial enforcement order relating to a contested claim – Claim for payment out of the insolvency estate, on the basis of such an enforcement order – Situation falling outside the scope of Regulation No 1896/2006 – Court clearly lacking jurisdiction

C-488/13, [2014] EUECJ C-488/13 – CO
Bailii
Regulation (EC) No 1896/2006

European, Insolvency

Updated: 21 December 2021; Ref: scu.536719

Burgo Group v Illochroma SA: ECJ 4 Sep 2014

ECJ (Judgment) Request for a preliminary ruling – Judicial cooperation in civil matters – Insolvency proceedings – Definition of ‘establishment’ – Group of companies – Establishment – Right to request the opening of secondary insolvency proceedings – Criteria – Person empowered to request the opening of secondary insolvency proceedings

A. Tizzano, P
C-327/13, [2014] EUECJ C-327/13
Bailii

European, Insolvency

Updated: 21 December 2021; Ref: scu.536444

Finnerty and Another v Clark and Another: CA 21 Jul 2011

The court was asked what would amount to good and sufficient grounds for the exercise of the court’s discretion to order the removal of administrators from their office.

Mummery, Carnwath, Richards LJJ
[2011] EWCA Civ 858, [2012] Bus LR 594, [2011] BPIR 1514, [2011] BCC 702, [2011] NPC 90, [2012] 1 BCLC 286
Bailii
Insolvency Act 1986
England and Wales

Insolvency

Updated: 20 December 2021; Ref: scu.442016

Freeburn v Hunt: 2010

[2010] BPIR 325
Cited by:
Cited – Brook v Reed CA 25-Mar-2011
The court was asked ‘What relation should the costs and remuneration bear to the circumstances, and in particular the size, of the bankruptcy?’ The bankrupt had considered that the costs first awarded to the trustee in bankruptcy and the trustee’s . .

Lists of cited by and citing cases may be incomplete.

Insolvency, Costs

Updated: 18 December 2021; Ref: scu.430879

Re Super Aguri F1 Ltd: 2011

[2011] BPIR 256
England and Wales
Cited by:
Cited – Brook v Reed CA 25-Mar-2011
The court was asked ‘What relation should the costs and remuneration bear to the circumstances, and in particular the size, of the bankruptcy?’ The bankrupt had considered that the costs first awarded to the trustee in bankruptcy and the trustee’s . .

Lists of cited by and citing cases may be incomplete.

Insolvency, Costs

Updated: 18 December 2021; Ref: scu.430880

In re Lundy Granite Co; Ex parte Heavan: CA 1871

The landlord of Lundy Island, which was let to a third party, distrained upon goods of the company which had been left upon the tenant’s property. The distraint was for rent which had fallen due more than a year after the winding up order. The tenant had agreed to assign the lease to the company but had not actually done so. He had however allowed the company into possession and the company had brought its goods upon the land. After the winding up order the liquidator retained possession with a view to a sale of the company’s assets on the land.
Held: The distress was allowed. It was not in respect of a claim for rent against the company, for which the landlord could have proved in the liquidation. The company was not his tenant. The landlord was exercising his ancient right to distrain upon any goods on the land, whether they belonged to his tenant or not. It should not make a difference that the third party to whom the goods belonged happened to be a company in liquidation. Second, even if the rent had been owing by the company, the liquidator had retained possession of the land for the purposes of the liquidation. ‘ . . if the company for its own purposes, and with a view to the realisation of the property to better advantage, remains in possession of the estate, which the lessor is therefore not able to obtain possession of, common sense and ordinary justice require the court to see that the landlord receives the full value of the property.’
James LJ said: ‘if the Company for its own purposes, and with a view to the realisation of the property to better advantage, remains in possession of the estate, which the lessor is therefore not able to obtain possession of, common sense and ordinary justice require the court to see that the landlord receives the full value of the property.’

Sir William James LJ
(1871) LR 6 Ch App 462
England and Wales
Citing:
Followed – In re Progress Assurance Co Ex parte Liverpool Exchange Co CA 1870
Where offices had been let to a company which was ordered to be wound up by the Court, a distress was subsequently put in for rent by the lessors, under which the office furniture was seized.
Held: as possession of the offices had not, in the . .

Cited by:
Cited – Kahn and Another v Commissioners of Inland Revenue; In re Toshoku Finance plc HL 20-Feb-2002
A company went into liquidation, being owed substantial sums by another company in the same group, but itself insolvent. A settlement did not include accrued interest, but was claimed to be taxed as if it had, and on an accruals basis. If so, was . .
Applied – In re Watson, Kipling and Co ChD 1883
An assessment for rates had been made after the liquidation of the company upon property occupied by the company. The court rejected the submission of counsel for the rating authority that: ‘where a liability is incurred during the winding-up, that . .
Cited – In re Atlantic Computer Systems Plc CA 1992
The chargor was a company which arranged with the chargee, a funding bank, that it should purchase equipment and let it on hire purchase to the chargor with permission to sub-lease to end users. The chargor charged to the chargee by way of security . .
Cited – In Re Kentish Homes Ltd ChD 31-Mar-1993
The question was whether a post-liquidation liability to community charge on empty flats was an expense of the liquidation.
Held: The company was the chargeable person in respect of the flats for the relevant periods, but the liability was . .
Cited – Wright and Another (Liquidators of SHB Realisations Ltd) v The Prudential Assurance Company Ltd ChD 6-Mar-2018
IVA is a special form of contract
Liquidators asked the court whether sums sought by the insolvent company’s landlords were payable and or provable. Under an IVA, the copany had been paying reduced rents, but the arrangement document provided that the full rents would be restored on . .

Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 18 December 2021; Ref: scu.190095

Kahn and Another v Commissioners of Inland Revenue; In re Toshoku Finance plc: HL 20 Feb 2002

A company went into liquidation, being owed substantial sums by another company in the same group, but itself insolvent. A settlement did not include accrued interest, but was claimed to be taxed as if it had, and on an accruals basis. If so, was this an expense properly arising in the insolvency, and payable as a preferred debt?
Held: Debts arising from pre-liquidation were to be proved, but a debt arising in the administration should be paid in full. The issue had been settled by statute. The tax was a proper disbursement in the insolvency, and was payable in full. Whether debts should count as expenses of the liquidation is a matter for the discretion of the court.

Lord Hoffmann Lord Woolf CJ Lord Hutton Lord Hobhouse of Wood-borough Lord Rodger of Earlsferry
Gazette 21-Mar-2002, [2002] UKHL 6, Times 25-Feb-2002, [2002] 1 WLR 671, [2003] 1 AC 1, [2002] 2 All ER 113, [2002] 2 Cr App R 9, [2002] HRLR 23, (2002) 166 JPN 431, (2002) 166 JP 333
House of Lords, Bailii
Income and Corporation Taxes Act 1988 8(2), Finance Act 1996 Ch II, Insolvency Act 1986 115, Insolvency Rules 1986 (SI 1986 No 1925) 4.218(1) 4.220(1)
England and Wales
Citing:
Cited – In re Watson, Kipling and Co ChD 1883
An assessment for rates had been made after the liquidation of the company upon property occupied by the company. The court rejected the submission of counsel for the rating authority that: ‘where a liability is incurred during the winding-up, that . .
Approved – In re Mesco Properties Ltd ChD 1979
The court considered whether corporation tax had to be paid as an expense of the liquidation in priority to other claims. In that case it had arisen not on profits but on chargeable gains, on sales of the company’s properties after the commencement . .
Cited – In re Mesco Properties Ltd CA 1980
Tax legislation provided that the company was chargeable to corporation tax on a capital gain arising in the winding up.
Held: The appeal failed. It was a tax which the liquidator was bound to discharge by payment, and the payment was a . .
Cited – In re London Metallurgical Co 1985
A costs order made against liquidators arising from proceedings they had taken, will usually have priority over the general expenses of the action. The list of expenses said nothing about the costs of litigation incurred by the liquidator or awarded . .
Cited – In re M C Bacon Ltd ChD 1990
A liquidator claimed that the costs of an unsuccessful attempt to set a floating charge aside should be paid out of the assets subject to the charge in priority to the claims of the charge holder.
Held: The rule was a complete statement of the . .
Cited – In re Atlantic Computer Systems Plc CA 1992
The chargor was a company which arranged with the chargee, a funding bank, that it should purchase equipment and let it on hire purchase to the chargor with permission to sub-lease to end users. The chargor charged to the chargee by way of security . .
Cited – Lewis v Commissioner of Inland Revenue and others CA 2-Nov-2000
The liquidator in a creditor’s voluntary liquidation sought a direction that he could take his costs of pursuing former directors in actions for wrongful trading and preferences, out of realised funds. It was held that nothing in the rules or Act . .
Cited – In Re Kentish Homes Ltd ChD 31-Mar-1993
The question was whether a post-liquidation liability to community charge on empty flats was an expense of the liquidation.
Held: The company was the chargeable person in respect of the flats for the relevant periods, but the liability was . .
Cited – In re Exhall Coal Mining Co Ltd CA 1864
Section 163 provided ‘any . . distress or execution put in force against the estate or effects of the company after the commencement of the winding up shall be void to all intents.’ After the presentation of a petition, the commencement of a . .
Cited – In re Progress Assurance Co Ex parte Liverpool Exchange Co CA 1870
Where offices had been let to a company which was ordered to be wound up by the Court, a distress was subsequently put in for rent by the lessors, under which the office furniture was seized.
Held: as possession of the offices had not, in the . .
Cited – In re Lundy Granite Co; Ex parte Heavan CA 1871
The landlord of Lundy Island, which was let to a third party, distrained upon goods of the company which had been left upon the tenant’s property. The distraint was for rent which had fallen due more than a year after the winding up order. The . .
Cited – In re Oak Pits Colliery Co CA 1882
The court examined the basis of the rule that the court has a discretion to order a liquidator to pay the full rent of a property he retained: ‘When the liquidator retains property for the purpose of advantageously disposing of it, or when he . .
Cited – Hardy v Fothergill 1888
Rent falling due after a winding up of the tenant was a future debt for which the landlord could have proved in the tenant’s liquidation. . .
Cited – In re ABC Coupler and Engineering Co Ltd (No 3) ChD 1970
The liquidator when appointed closed down the business which had been conducted on the premises, had the company’s plant and machinery valued and thought about what he should do.
Held: The rent did not become a liquidation expense until some . .
Cited – In re Downer Enterprises Ltd ChD 1974
The company was the assignee of a lease. The rent appears to have been payable in advance on the usual quarter days. The company went into liquidation in November 1971. At some time before April 1972 the liquidator instructed agents to market the . .
Cited – Re HH Realisations Ltd ChD 1975
The liquidator of a company ceased to be liable to pay the rent under the company’s lease in full from the time it gave notice to the landlord that it was seeking authority to disclaim the lease, even though it remained in occupation for nearly two . .
Cited – In re Watson, Kipling and Co ChD 1883
An assessment for rates had been made after the liquidation of the company upon property occupied by the company. The court rejected the submission of counsel for the rating authority that: ‘where a liability is incurred during the winding-up, that . .
Cited – In re National Arms and Ammunition Co CA 1885
‘If the company retains the possession of property which would be rateable in the hands of anyone else, it is only reasonable that it should be rateable in the hands of the company . . the true test is whether there has been a beneficial occupation . .
Cited – In re Blazer Fire Lighter Ltd 1895
The liquidator had closed the business and done nothing on the premises except to instal a caretaker to protect them from vandalism. That was sufficient to continue the company in rateable occupation. So the rates were an expense of the liquidation. . .

Cited by:
Cited – Digital Equipment Co Ltd and Others v Bower and Others ChD 4-Dec-2003
The liquidators had lost their legal action, and had been ordered to pay the present claimants their costs. They sought payment out of an insolvency services account in competition with the solicitors for the liquidators.
Held: An award of . .
Cited – McGrath and Honey v McMahon and Others, Re HIH Casualty and General Insurance Ltd and others CA 9-Jun-2006
The insurance company was to be wound up. It operated internationally but was registered in Australia. The Australian liquidator now sought an order for the transfer of assets held here to Australia.
Held: It was inevitable that cross border . .
Cited – Unadkat and Co (Accountants) Ltd v Bhardwaj and Another ChD 11-Oct-2006
Section 651 was broad enough to enable the court to order that the costs of having the dissolution of a company declared void be treated as an expense in the winding-up, notwithstanding the decision of the House of Lords in Re Toshoku Finance UK plc . .
Cited – Irish Reel Productions Ltd v Capitol Films Ltd ChD 10-Feb-2010
The petitioner’s winding-up petition had been dismissed on the defendant company being put into administration. The petitioner asked for its costs to be paid as an administration expense payable in priority to the administrator’s expenses.
Cited – McCartney and Unite The Union and Another v Nortel Networks UK Ltd (In Administration) ChD 22-Apr-2010
The administrators gave employees of the company notice of termination of their employment. Then administrators refused consent under para 43(6) to actions against the company in the Northern Ireland Industrial Tribunal for protective awards, unfair . .
Cited – In re Nortel Companies and Others SC 24-Jul-2013
The court was asked as to the interrelationship of the statutory schemes relating to the protection of employees’ pensions and to corporate insolvency.
Held: Liabilities which arose from financial support directions or contribution notices . .
Explained – Bloom and Others v The Pensions Regulator (Nortel, Re) ChD 10-Dec-2010
Applications for directions by the administrators of twenty companies in two groups, all raising the same common questions as to the effect of the Financial Support Direction regime created by the Pensions Act 2004 upon companies in administration . .

Lists of cited by and citing cases may be incomplete.

Corporation Tax, Insolvency, Costs

Updated: 18 December 2021; Ref: scu.167631

In re Progress Assurance Co Ex parte Liverpool Exchange Co: CA 1870

Where offices had been let to a company which was ordered to be wound up by the Court, a distress was subsequently put in for rent by the lessors, under which the office furniture was seized.
Held: as possession of the offices had not, in the opinion of the Court, been retained for the purpose of the company’s business, the distress was illegal under s. 163 of the Companies Act, 1862, and that the lessors were only entitled to prove for the amount due to them.
The lessors of a company in liquidation levied a distress for unpaid rent upon its office furniture three months after the winding up order. A distress after the winding up order would be allowed to proceed only where the company ‘has retained not merely formal but actual possession of the property for the purpose of carrying on the business of the liquidation . .’

Lord Romilly MR
(1870) LR 9 Eq 370, [1870] UKLawRpEq 101
Commonlii
England and Wales
Cited by:
Followed – In re Lundy Granite Co; Ex parte Heavan CA 1871
The landlord of Lundy Island, which was let to a third party, distrained upon goods of the company which had been left upon the tenant’s property. The distraint was for rent which had fallen due more than a year after the winding up order. The . .
Cited – Kahn and Another v Commissioners of Inland Revenue; In re Toshoku Finance plc HL 20-Feb-2002
A company went into liquidation, being owed substantial sums by another company in the same group, but itself insolvent. A settlement did not include accrued interest, but was claimed to be taxed as if it had, and on an accruals basis. If so, was . .

Lists of cited by and citing cases may be incomplete.

Company, Insolvency, Landlord and Tenant

Updated: 18 December 2021; Ref: scu.190094

Julian Hernandez And Others v Reino de Espana: ECJ 10 Jul 2014

ECJ Protection of employees in the event of the insolvency of their employer – Directive 2008/94/EC – Scope – Employer’s right to compensation from a Member State in respect of the remuneration paid to an employee during proceedings challenging that employee’s dismissal beyond the 60th working day after the action challenging the dismissal was brought – No right to compensation in the case of invalid dismissals – Subrogation of the employee to the right to compensation of his employer in the event of that employer’s provisional insolvency – Discrimination against employees who are the subject of an invalid dismissal – Charter of Fundamental Rights of the European Union – Scope – Article 20

T. von Danwitz (Rapporteur), P
C-198/13, [2014] EUECJ C-198/13
Bailii
Directive 2008/94/EC

European, Employment, Insolvency

Updated: 16 December 2021; Ref: scu.534099

Wagstaff v Read: 20 Nov 1683

Purchaser not hurt in Chancery – Portman became bankrupt, the commissioners assign his Estate, whereof the Plaintiff made Title to some Goods, and exhibits his Bill. against the Defendant to discover the Goods, and their Value, and what and how much he paid for them, because the Plaintiff charges, they came to the Defendant’s possession after the bankrupt broke : The Defendant sets forth, for what Goods did ever come to his Hands, he bought of Portman bona fide, for a full and valuable consideration, nor did not know, nor had any Notice that at the Time of buying until the now Bill, was a bankrupt, or of any Account of his Bankruptcy, and pleads this Matter against any Discovery.

[1683] EngR 80, (1683) 2 Chan Cas 156, (1683) 22 ER 892 (C)
Commonlii
England and Wales

Equity, Insolvency

Updated: 16 December 2021; Ref: scu.401091

Crawford v Dunlop and Another: CANI 20 Feb 2014

The court was asked ‘When does a director and shareholder of a company fall to be treated as an ’employee’ of the company for the purposes of redundancy and insolvency payments from the National Insurance Fund administered by the Department of Employment and Learning?’

Girvan LJ Coghlin LJ and Weatherup J
[2014] NICA 26
Bailii
Northern Ireland

Employment, Insolvency, Taxes – Other

Updated: 16 December 2021; Ref: scu.534050

National Westminster Bank Plc v Spectrum Plus Ltd and others: ChD 15 Jan 2004

The company granted a debenture to the claimant purporting to secure its book debts. The company went into liquidation. The liquidator challenged the bank’s charge.
Held: Siebe was wrongly decided. The charge was ineffective over the book debts.

Vice Chancellor Andrew Morritt
[2004] 2 WLR 783, [2004] 1 All ER 981, [2004] BCC 51, [2004] 1 BCLC 335, [2004] EWHC 9 (Ch)
Bailii
England and Wales
Citing:
Doubted – Siebe Gorman and Co Ltd v Barclays Bank Ltd ChD 1979
It was possible to create a fixed charge over present and future book debts and on its true construction, the debenture granted to Barclays Bank Ltd in this case had done so. If the chargor of book debts, having collected the book debts, ‘[had] had . .
Cited – Agnew and Kevin James Bearsley v The Commissioner of Inland Revenue, and Official Assignee for the Estate In Bankruptcy of Bruce William Birtwhistle and Mark Leslie Birtwhistle PC 5-Jun-2001
(New Zealand) A charge had been given by a company over its book debts. The charge was expressed to create a fixed charge over debts uncollected when a receiver was appointed, so that on collection they became payable to the bank. Until the receiver . .
Cited – Hadley Industries Plc v Metal Sections Limited, Metsec (UK) Limited PatC 13-Nov-1998
A court no longer has the discretion as to whether to amend a patent upon application, but must, following European practice, do so when a proper application is made. This is the case despite the clear wording of the English Act. A judge at first . .
Cited – In re Yorkshire Woolcombers Association Ltd CA 2-Jan-1903
Nature of Company’s Debenture Charge
The court considered the nature of a debenture charge. Romer LJ said: ‘I certainly do not intend to attempt to give an exact definition of the term ‘floating charge’, nor am I prepared to say that there will not be a floating charge within the . .
Cited – In re Yorkshire Woolcombers Association Ltd ChD 1903
Farwell J said: ‘A charge on all book debts which may now be, or at any time hereafter become charged or assigned, leaving the mortgagor or assignor free to deal with them as he pleases until the mortgagee or assignee intervenes, is not a specific . .
Cited – Illingworth v Houldsworth HL 1904
A clause in a floating charge allowing a company to continue to trade in the assets charged: ‘contemplates not only that it should carry with it the book debts which were then existing, but it contemplates also the possibility of those book debts . .
Cited – Tailby v Official Receiver HL 1888
A creditor can create, for good consideration an equitable charge over book debts which will attach to them as soon as they come into existence.
Lord Macnaghten said: ‘It was admitted by the learned counsel for the respondent, that a trader . .
Doubted – Chalk v Kahn 2000
. .
Doubted – Re Armagh Shoes Ltd 1984
. .
Doubted – In Re Keenan Bros Ltd 1986
(Supreme Court of the Republic of Ireland) A debenture conferred a fixed charge on book debts. It specifically provided that withdrawals from the account to which the proceeds of the book debts had to be credited might only be made with the prior . .
Doubted – Barclays Bank plc v Willowbrook International Ltd 1987
. .
Doubted – Re Permanent Houses (Holdings) Ltd 1988
. .
Coubted – Re Sperrin Textiles Ltd 1992
. .
Doubted – In Re Portbase Clothing Ltd; Mould v Taylor 1993
The company had given two debentures, one fixed and one floating. Their priority was fixed by a deed of priority. On insolvency the liquidator sought direction as to the application of the assets.
Held: The deed made the bank’s floating charge . .
Doubted – William Gaskell Ltd v Highley 1994
. .
Cited – In re Brightlife Ltd ChD 1987
Parties contractual freedom to be respected
A clause in a debenture gave a charge which provided that the chargor should not: ‘deal with its book or other debts or securities for money otherwise than in the ordinary course of getting in and realising the same which expression shall not . .
Cited – Re: A Company (No. 005009 of 1987), ex parte Copp ChD 1988
MC Bacon Ltd had borrowed money from a bank. The loan was unsecured. The company got into financial difficulty. The bank commissioned a report on the company’s financial affairs; and insisted on the grant of a debenture to secure the company’s . .
Approved – Supercool Refrigeration and Air Conditioning v Hoverd Industries Ltd 1994
(New Zealand) The court noted a greater reluctance in Australia and Ireland than in England to accept the creation of a fixed charge over present and future book debts.
Tompkins J said:’ a requirement to pay the proceeds of the book debts . .
Cited – Re Warden and Hotchkiss Ltd CA 1945
Judicial decisions upon which title to property depends or which, by establishing principles of construction or otherwise, form the basis of contracts or which affect the general conduct of affairs so that their alteration would mean, for example, . .
Cited – In Re New Bullas Trading Ltd CA 12-Jan-1994
A company debenture, which purported to create a fixed charge on book debts, and a second floating charge over the proceeds when paid, was valid and effective to create a fixed charge. The chargee was not a bank, and therefore no facility could be . .
Cited – Street v Mountford HL 6-Mar-1985
When a licence is really a tenancy
The document signed by the occupier stated that she understood that she had been given a licence, and that she understood that she had not been granted a tenancy protected under the Rent Acts. Exclusive occupation was in fact granted.
Held: . .

Cited by:
Appeal from – National Westminster Bank Plc v Spectrum Plus Ltd; In re Spectrum Plus CA 26-May-2004
The court was asked whether a charge given over book debts in a debenture was floating or fixed.
Held: Since the charge asserted some control over receipt of the payments, it was a fixed charge. Upon payment into the account, title to the . .
At First Instance – National Westminster Bank plc v Spectrum Plus Limited and others HL 30-Jun-2005
Former HL decision in Siebe Gorman overruled
The company had become insolvent. The bank had a debenture and claimed that its charge over the book debts had become a fixed charge. The preferential creditors said that the charge was a floating charge and that they took priority.
Held: The . .

Lists of cited by and citing cases may be incomplete.

Insolvency, Banking

Updated: 13 December 2021; Ref: scu.191233

National Westminster Bank plc v Spectrum Plus Limited and others: HL 30 Jun 2005

Former HL decision in Siebe Gorman overruled

The company had become insolvent. The bank had a debenture and claimed that its charge over the book debts had become a fixed charge. The preferential creditors said that the charge was a floating charge and that they took priority.
Held: The appeal was allowed. The debenture, although expressed to grant the bank a fixed charge over Spectrum’s book debts, in law granted only a floating charge. The Siebe Gorman case was incorrect and could not stand. A seven man House considered whether it was appropriate to overrule an established case, upon which so many commercial decisions and arrangements were founded. It was, but it was not proper to overrule the case only prospectively.
Lord Nicholls of Birkenhead said: ‘The essence of the principled argument against prospective overruling is that in this country prospective overruling is outside the constitutional limits of the judicial function. It would amount to the judicial usurpation of the legislative function. Power to make rulings having only prospective effect, it is said, is not inherent in the judicial role. A ruling having only prospective effect cannot be characterised as merely a less extensive form of overruling than overruling with both retrospective and prospective effect. Prospective overruling robs a ruling of its essential authenticity as a judicial act. Courts exist to decide the legal consequences of past events. A court decision which takes the form of a ‘pure’ prospective overruling does not decide the dispute between the parties according to what the court declares is the present state of the law. ‘ However ‘If, altogether exceptionally, the House as the country’s supreme court were to follow this course I would not regard it as trespassing outside the functions properly to be discharged by the judiciary under this country’s constitution. Rigidity in the operation of a legal system is a sign of weakness, not strength. It deprives a legal system of necessary elasticity. Far from achieving a constitutionally exemplary result, it can produce a legal system unable to function effectively in changing times. ‘Never say never’ is a wise judicial precept, in the interest of all citizens of the country.’
He discussed the possibility of judge made law: ‘Judges have a legitimate law-making function. It is a function they have long exercised. In common law countries much of the basic law is still the common law. The common law is judge-made law. For centuries, judges have been charged with the responsibility of keeping this law abreast of current social conditions and expectations.’

Lord Nicholls of Birkenhead, Lord Steyn, Lord Hope of Craighead, Lord Scott of Foscote, Lord Walker of Gestingthorpe, Baroness Hale of Richmond, Lord Brown of Eaton-under-Heywood
[2005] 3 WLR 58, [2005] 2 AC 680, [2005] 4 All ER 209, [2005] All ER (D) 368, [2005] 2 Lloyds Rep 275, [2005] 2 BCLC 269, [2005] BCC 694, [2005] UKHL 41, Times 31-Jul-2005
Bailii, House of Lords
England and Wales
Citing:
Cited – Great Northern Railway Co v Sunburst Oil and Refining Co 1932
(US Supreme Court) The Constitution neither prohibits nor requires prospective overruling. The Federal Court, Cardoza J said, ‘has no voice upon the subject.’ . .
Cited – West Midland Baptist (Trust) Association (Inc) v Birmingham Corporation HL 1970
The mere fact that an enactment shows that Parliament must have thought that the law was one thing, does not preclude the courts from deciding that the law was in fact something different. The position would be different if the provisions of the . .
Cited – Donoghue (or M’Alister) v Stevenson HL 26-May-1932
Decomposed Snail in Ginger Beer Bottle – Liability
The appellant drank from a bottle of ginger beer manufactured by the defendant. She suffered injury when she found a half decomposed snail in the liquid. The glass was opaque and the snail could not be seen. The drink had been bought for her by a . .
Cited – Banco Popolare di Cremona v Agenzia Entrate Uffficio Cremona ECJ 17-Mar-2005
A ruling of the European Court of Justice might be subject to a temporal limitation that the ruling should not take effect until a future date, namely, when the State had had a reasonable opportunity to introduce new legislation. . .
Appeal from – National Westminster Bank Plc v Spectrum Plus Ltd; In re Spectrum Plus CA 26-May-2004
The court was asked whether a charge given over book debts in a debenture was floating or fixed.
Held: Since the charge asserted some control over receipt of the payments, it was a fixed charge. Upon payment into the account, title to the . .
Cited – Launchbury v Morgans HL 9-May-1972
The owner of a car appealed against a ruling that she was responsible for injury suffered by the three respondents who had been passengers in the car when it crashed. The owner had not been with them. The care was driven by her husband with her . .
Overruled – Siebe Gorman and Co Ltd v Barclays Bank Ltd ChD 1979
It was possible to create a fixed charge over present and future book debts and on its true construction, the debenture granted to Barclays Bank Ltd in this case had done so. If the chargor of book debts, having collected the book debts, ‘[had] had . .
Cited – Regina v National Insurance Commissioner, Ex parte Hudson HL 1972
The House considered whether it would have power to make a ruling with prospective effect only. Lord Diplock said the matter deserved further consideration; Lord Simon said that the possibility of prospective overruling should be seriously . .
Cited – Miliangos v George Frank (Textiles) Ltd HL 1975
The issue was whether an English court was able to award damages in Sterling only.
Held: The House distinguished clearly between the substance of the debtor’s obligations and the effect of English procedural law when a debt in a foreign . .
Cited – Linkletter v Walker 1965
(US Supreme Court) In both criminal and civil cases ‘the accepted rule today is that in appropriate cases the Court may in the interests of justice make the rule prospective.’ . .
Cited – Golak Nath v State of Punjab 1967
(Supreme Court of India) The court considered whether it had jurisdiction to make a rulinging which was prospective only.
Held: The court reversed two earlier decisions of its own in circumstances where meanwhile constitutional amendments had . .
Cited – Chevron Oil Co v Huson 1971
(US Supreme Court) The Supreme Court summarised three factors to be taken into account when considering whether a ruling should be applied non-retroactively: whether the decision established a new principle of law, whether retrospective operation . .
Cited – Defrenne v Sabena (No 2) ECJ 8-Apr-1976
ECJ The principle that men and women should receive equal pay, which is laid down by article 119, is one of the foundations of the community. It may be relied on before the national courts. These courts have a . .
Cited – Marckx v Belgium ECHR 13-Jun-1979
Recognition of illegitimate children
The complaint related to the manner in which parents were required to adopt their own illegitimate child in order to increase his rights. Under Belgian law, no legal bond between an unmarried mother and her child results from the mere fact of birth. . .
Cited – India Cement Ltd v State of Tamil Nadu 1990
(Supreme Court of India) The court found that it had jurisdiction to make rulings of retrospective effect only. Non-retroactive effect may be given to a ruling which decides an issue for the first time. . .
Cited – Re Edward and Edward 1987
(Saskatchewan Court of Appeal) The court rejected the idea of making rulings of prospective effect only. Prospective overruling would be a ‘dramatic deviation from the norm in both Canada and England’. Bayda CJS said ‘the most cogent reason for . .
Cited – Murphy v Attorney General 1982
(Supreme Court of Ireland) The Supreme Court held that certain taxation provisions were unconstitutional and void. The court rejected an argument that it was for the courts to say whether these statutory provisions should be held to be invalid . .
Cited – Arthur JS Hall and Co (A Firm) v Simons; Barratt v Woolf Seddon (A Firm); Harris v Schofield Roberts and Hill (A Firm) HL 20-Jul-2000
Clients sued their solicitors for negligence. The solicitors responded by claiming that, when acting as advocates, they had the same immunities granted to barristers.
Held: The immunity from suit for negligence enjoyed by advocates acting in . .
Cited – Reference re Language Rights under the Manitoba Act 1870 1985
(Supreme Court of Canada) The court declined to give retroactive effect to its decision on the constitutional invalidity of all statutes and regulations of the Province of Manitoba not printed and published in both English and French. A declaration . .
Cited – Regina v Governor HM Prison Brockhill, ex parte Michelle Carol Evans (No 2) CA 19-Jun-1998
The plaintiff was serving a sentence of imprisonment. Her detention was correctly calculated in accordance with the law as understood. That method was later disapproved when the Divisional Court laid down (everyone has assumed correctly) a different . .
Cited – Regina v Governor of Her Majesty’s Prison Brockhill ex parte Evans (No 2) HL 27-Jul-2000
The release date for a prisoner was calculated correctly according to guidance issued by the Home Office, but case law required the guidance to be altered, and the prisoner had been detained too long. The tort of false imprisonment is one of strict . .
Cited – Regina (Bidar) v Ealing London Borough Council and Another ECJ 15-Mar-2005
Europa (Grand Chamber of the Court of Justice of the European Union) Citizenship of the Union – Articles 12 EC and 18 EC – Assistance for students in the form of subsidised loans – Provision limiting the grant of . .
Cited – Goodwin v The United Kingdom ECHR 11-Jul-2002
The claimant was a post operative male to female trans-sexual. She claimed that her human rights were infringed when she was still treated as a man for National Insurance contributions purposes, where she continued to make payments after the age at . .
Cited – Kleinwort Benson Ltd v Lincoln City Council etc HL 29-Jul-1998
Right of Recovery of Money Paid under Mistake
Kleinwort Benson had made payments to a local authority under swap agreements which were thought to be legally enforceable when made. Subsequently, a decision of the House of Lords, (Hazell v. Hammersmith and Fulham) established that such swap . .
Cited – Wilson v Secretary of State for Trade and Industry; Wilson v First County Trust Ltd (No 2) HL 10-Jul-2003
The respondent appealed against a finding that the provision which made a loan agreement completely invalid for lack of compliance with the 1974 Act was itself invalid under the Human Rights Act since it deprived the respondent of its property . .
Cited – Fitzpatrick v Sterling Housing Association Ltd HL 28-Oct-1999
Same Sex Paartner to Inherit as Family Member
The claimant had lived with the original tenant in a stable and long standing homosexual relationship at the deceased’s flat. After the tenant’s death he sought a statutory tenancy as a spouse of the deceased. The Act had been extended to include as . .
Cited – Ha and Another v State of New South Wales and Others 17-Feb-1997
(High Court of Australia) The court unanimously considered that ‘it would be a perversion of judicial power to maintain in force that which is acknowledged not to be the law’. This would especially be so where ‘non-compliance with a properly . .
Cited – Tailby v Official Receiver HL 1888
A creditor can create, for good consideration an equitable charge over book debts which will attach to them as soon as they come into existence.
Lord Macnaghten said: ‘It was admitted by the learned counsel for the respondent, that a trader . .
Cited – Carse v Coppen IHCS 8-Dec-1950
The court considered the inability to create a floating charge over a company’s assets in Scots law. It was conceded that a company registered in Scotland could not create a valid and effectual floating charge over its assets in Scotland, but it was . .
Cited – In Re Keenan Bros Ltd 1986
(Supreme Court of the Republic of Ireland) A debenture conferred a fixed charge on book debts. It specifically provided that withdrawals from the account to which the proceeds of the book debts had to be credited might only be made with the prior . .
Cited – Agnew and Kevin James Bearsley v The Commissioner of Inland Revenue, and Official Assignee for the Estate In Bankruptcy of Bruce William Birtwhistle and Mark Leslie Birtwhistle PC 5-Jun-2001
(New Zealand) A charge had been given by a company over its book debts. The charge was expressed to create a fixed charge over debts uncollected when a receiver was appointed, so that on collection they became payable to the bank. Until the receiver . .
Cited – Westminster Bank Ltd v Hilton HL 1926
As against the money of the customer’s in the banker’s hands the relationship between banker and customer is that of principal and agent.
Lord Atkinson said: ‘It is well established that the normal relation between a banker and his customer . .
Cited – Practice Statement (Judicial Precedent) HL 1966
The House gave guidance how it would treat an invitation to depart from a previous decision of the House. Such a course was possible, but the direction was not an ‘open sesame’ for a differently constituted committee to prefer their views to those . .
Cited – Regina v Bow Street Metropolitan Stipendiary Magistrate, ex parte Pinochet Ugarte (No 2) HL 15-Jan-1999
A petition was brought to request that a judgment of the House be set aside because the wife of one their lordships, Lord Hoffmann, was as an unpaid director of a subsidiary of Amnesty International which had in turn been involved in a campaign . .
Cited – Rondel v Worsley HL 1967
Need for Advocate’s Immunity from Negligence
The appellant had obtained the services of the respondent barrister to defend him on a dock brief, and alleged that the respondent had been negligent in the conduct of his defence.
Held: The House considered the immunity from suit of . .
Cited – Malik v Bank of Credit and Commerce International (BCCI); Mahmud v Bank of Credit and Commerce International HL 12-Jun-1997
Allowance of Stigma Damages
The employees claimed damages, saying that the way in which their employer had behaved during their employment had led to continuing losses, ‘stigma damages’ after the termination.
Held: It is an implied term of any contract of employment that . .
Cited – Sharp v Thomson HL 1997
A floating charge was given over the whole of a company’s property which might from time to time be ‘comprised in our property and undertaking’. The charge terms echoed the section which allows a company to create a charge ‘over all or any part of . .
Cited – Halesowen Presswork and Assemblies Ltd v Westminster Bank Ltd CA 1971
The relationship of banker and customer was a single relationship the situation was not one of lien. Buckley LJ said: ‘Nor is it a set-off situation, which postulates mutual but independent obligations between the two parties. It is an accounting . .
Cited – Hindcastle Ltd v Barbara Attenborough Associates Ltd and Others HL 22-Feb-1996
The guarantor of an original tenant under the lease remains liable after the disclaimer the lease on insolvency. The disclaimer operates to determine the lease altogether with the result that the landlord’s reversion is accelerated. ‘In order to . .
Cited – Lipkin Gorman v Karpnale Ltd CA 1989
A partner in a firm of solicitors stole money from them, and spent it gambling with the defendants. The firm sued also their banker, who had been held to be aware of the defaulting partner’s weaknesses and activities.
Held: The solicitors . .
Cited – In Re New Bullas Trading Ltd CA 12-Jan-1994
A company debenture, which purported to create a fixed charge on book debts, and a second floating charge over the proceeds when paid, was valid and effective to create a fixed charge. The chargee was not a bank, and therefore no facility could be . .
Cited – In re A Company (No 005009 of 1987); Ex parte Copp 1989
Knox J declined to look at evidence about an agreed overdraft limit, regarding it as a ‘collateral arrangement’. He said: ‘this is a type of transaction in respect of which judicial precedent is a particularly valuable guide to the commercial . .
Cited – Salomon v A Salomon and Company Ltd HL 16-Nov-1896
A Company and its Directors are not same paersons
Mr Salomon had incorporated his long standing personal business of shoe manufacture into a limited company. He held nearly all the shares, and had received debentures on the transfer into the company of his former business. The business failed, and . .
Cited – In re Panama New Zealand and Australian Royal Mail Co 1870
The company had charged its ‘undertaking and all sums of money arising therefrom’.
Held: ‘undertaking’ meant ‘all the property of the company, not only which existed at the date of the debenture, but which might afterwards become the property . .
Cited – In re Colonial Trusts Corporation CA 13-Dec-1880
A company formed for the purchase and management of land, and which was empowered by articles to borrow money for the purposes of the company provided that the amount borrowed should not at any time exceed the amount of the unpaid subscribed . .
Cited – Evans v Rival Granite Quarries Ltd CA 1910
The court discussed the nature of a floating charge, Buckley LJ describing it as: ‘A floating security is not a future security; it is a present security, which presently affects all the assets of the company expressed to be included in it. On the . .
Cited – In re Yorkshire Woolcombers Association Ltd CA 2-Jan-1903
Nature of Company’s Debenture Charge
The court considered the nature of a debenture charge. Romer LJ said: ‘I certainly do not intend to attempt to give an exact definition of the term ‘floating charge’, nor am I prepared to say that there will not be a floating charge within the . .
Cited – Illingworth v Houldsworth HL 1904
A clause in a floating charge allowing a company to continue to trade in the assets charged: ‘contemplates not only that it should carry with it the book debts which were then existing, but it contemplates also the possibility of those book debts . .
Cited – In Re Portbase Clothing Ltd; Mould v Taylor 1993
The company had given two debentures, one fixed and one floating. Their priority was fixed by a deed of priority. On insolvency the liquidator sought direction as to the application of the assets.
Held: The deed made the bank’s floating charge . .
Cited – Re: A Company (No. 005009 of 1987), ex parte Copp ChD 1988
MC Bacon Ltd had borrowed money from a bank. The loan was unsecured. The company got into financial difficulty. The bank commissioned a report on the company’s financial affairs; and insisted on the grant of a debenture to secure the company’s . .
Cited – William Gaskell Ltd v Highley 1994
. .
Approved – Supercool Refrigeration and Air Conditioning v Hoverd Industries Ltd 1994
(New Zealand) The court noted a greater reluctance in Australia and Ireland than in England to accept the creation of a fixed charge over present and future book debts.
Tompkins J said:’ a requirement to pay the proceeds of the book debts . .
Cited – In re Florence Land and Public Works Co 1878
The court considered a floating charge: ‘The question we have to decide must be decided, like all other questions of the kind, having regard to the surrounding circumstances under which the instrument was executed, and especially the respective . .
Cited – Re Holidair Ltd 1994
(Supreme Court of Ireland) The court considered whether a debenture created a floating charge over its book debts: ‘I am satisfied, accordingly, that the correct construction of the clause is that the trustee had a discretion to determine into what . .
Cited – Welsh Development Agency v Export Finance Co Ltd CA 1992
The court was asked whether a transaction relating to goods between an exporter and the defendant, as a financier, associated with sales by the exporter to third-party purchasers, amounted to a true sale by the exporter to the defendant or was . .
At First Instance – National Westminster Bank Plc v Spectrum Plus Ltd and others ChD 15-Jan-2004
The company granted a debenture to the claimant purporting to secure its book debts. The company went into liquidation. The liquidator challenged the bank’s charge.
Held: Siebe was wrongly decided. The charge was ineffective over the book . .

Cited by:
Cited – Lymington Marina Ltd v MacNamara and others CA 2-Mar-2007
A share in a marina had been inherited by one brother whose application to grant successive sub-lcences of it to the other two was rejected by the marina, who said that this was not permitted. The marina appealed a finding that it had to make its . .
Cited – AXA General Insurance Ltd and Others v Lord Advocate and Others SC 12-Oct-2011
Standing to Claim under A1P1 ECHR
The appellants had written employers’ liability insurance policies. They appealed against rejection of their challenge to the 2009 Act which provided that asymptomatic pleural plaques, pleural thickening and asbestosis should constitute actionable . .
Cited – Willers v Joyce and Another (Re: Gubay (Deceased) No 2) SC 20-Jul-2016
The Court was asked whether and in what circumstances a lower court may follow a decision of the Privy Council which has reached a different conclusion from that of the House of Lords (or the Supreme Court or Court of Appeal) on an earlier occasion. . .
Cited – Borwick Development Solutions Ltd v Clear Water Fisheries Ltd CA 1-May-2020
Only Limited Ownership of pond fish
BDS owned land with closed fishing ponds. They sold the land to the respondents, but then claimed that the fish, of substantial value, were not included in the contract. The court as asked whether the captive fish were animals ferae naturae or . .
Cited – Black, Regina (on The Application of) v Secretary of State for Justice SC 19-Dec-2017
The Court was asked whether the Crown is bound by the prohibition of smoking in most enclosed public places and workplaces, contained in Chapter 1 of Part 1 of the Health Act 2006.
Held: However reluctantly, the claimant’s appeal was . .

Lists of cited by and citing cases may be incomplete.

Banking, Insolvency, Constitutional

Leading Case

Updated: 13 December 2021; Ref: scu.228273

In Re Independent Insurance Co Ltd (No 2): 2003

Ferris J was required to consider the insolvency office-holders’ remuneration, assisted by a solicitor with wide insolvency experience, whose report sets out the general principles then accepted by the insolvency profession as the yardstick for claiming remuneration in insolvency proceedings.

Ferris J
[2003] 1 BCLC 640
England and Wales
Cited by:
Cited – In Re Cabletel Installations Ltd 1-Jul-2004
The court criticised the remuneration claimed by the insolvency office-holder were work had been carried out at too senior a level, and the calculation was an uncritical application of the time spent, and where there were more and lengthier meetings . .
Cited – Brook v Reed CA 25-Mar-2011
The court was asked ‘What relation should the costs and remuneration bear to the circumstances, and in particular the size, of the bankruptcy?’ The bankrupt had considered that the costs first awarded to the trustee in bankruptcy and the trustee’s . .

Lists of cited by and citing cases may be incomplete.

Insolvency, Costs

Updated: 13 December 2021; Ref: scu.430876

Barker v Bajjon: 2008

[2008] BPIR 771
England and Wales
Cited by:
Cited – Brook v Reed CA 25-Mar-2011
The court was asked ‘What relation should the costs and remuneration bear to the circumstances, and in particular the size, of the bankruptcy?’ The bankrupt had considered that the costs first awarded to the trustee in bankruptcy and the trustee’s . .

Lists of cited by and citing cases may be incomplete.

Insolvency, Costs

Updated: 13 December 2021; Ref: scu.430878

Upton v Taylor and Colley: 1999

Where it is always clear that there will be a surplus after creditors have been paid in full, the creditors have little or no commercial interest in the liquidator’s remuneration.

Rimer J
[1999] BPIR 168
Cited by:
Cited – Brook v Reed CA 25-Mar-2011
The court was asked ‘What relation should the costs and remuneration bear to the circumstances, and in particular the size, of the bankruptcy?’ The bankrupt had considered that the costs first awarded to the trustee in bankruptcy and the trustee’s . .

Lists of cited by and citing cases may be incomplete.

Insolvency, Costs

Updated: 13 December 2021; Ref: scu.430877

Hughmans Solicitors v Central Stream Services Ltd and Another: ChD 11 May 2012

Application by Hughmans Solicitors against Central Stream Services Limited (in liquidation) and Stephen Hunt (its liquidator) for an order for payment out of the proceeds of sale of a property of the sum to which Hughmans claim to be entitled as a judgment debt supported by a final charging order against the Property. The judgment debt arose from a claim for professional fees for work done by Hughmans as solicitors to a Mr Davidson, the registered proprietor of the Property at the time when the charging order was obtained.

Briggs J
[2012] EWHC 1222 (Ch)
Bailii
England and Wales

Insolvency

Updated: 13 December 2021; Ref: scu.457682

Bates v Bates (No 2): CA 21 Dec 1888

W petitioned for judicial separation from her husband on the ground of cruelty. An order was made that the respondent should pay the petitioner’s solicitor pounds 41 odd to cover costs already incurred and should pay into court pounds 40 as security for future costs alternatively give a bond. The respondent did none of these things and the petitioner applied for leave to issue a writ of attachment. Leave was granted by Butt J. The respondent appealed, relying upon section 4 of the 1869 Act. Counsel for the petitioner conceded that the order could not be supported so far as it related to the order for payment of pounds 41 odd.
Held: Subject to that, the appeal failed.
Cotton LJ said: ‘In my opinion the order for attachment was not in violation of the Debtors Act, because it was not for default in payment of a sum of money within the meaning of that section. The object of the Act was to prevent the imprisonment of persons for nonpayment of ordinary debts. No doubt the words used in the Act are very wide; but we must consider what was really meant by the payment of a sum of money. This order was not for the payment of a sum of money to the respondent; nor was it simply an order for the appellant to pay a sum of money into court; but there was an alternative, he was either to pay the money or to give a bond. It was argued that the mention of the bond was only subsidiary to the order for payment of the money, that the order was in effect simply an order to pay the money. I do not take that view. If the appellant had given the bond, he would have complied with the order . . The order was an order to give security, and as such was not within the 4th section of the Debtors Act . . ‘
Lindley LJ said: ‘The question turns upon the words of the 4th section of the Debtors Act. It is said that the appellant is within the protection of the Act, because he has made default in payment of a sum of money. But what do the words ‘payment of money’ in this section mean? In my opinion, they do not mean depositing a sum of money in court, to abide an order to be subsequently made. If the appellant had been ordered to pay the money to the receiver of the Court in discharge of an obligation to which he had been declared liable, that might be different. But that is not so here; he is to deposit the money in court, or to give security for it. That is not within the meaning of the words of the Act.’

Cotton LJ, Lindley LJ, Bowen LJ
(1888-1889) LR 14 PD 17, [1888] UKLawRpPro 54
Commonlii
Debtors Act 1869 4
England and Wales
Cited by:
Cited – Hussain v Vaswani and Others CA 18-Sep-2020
Breach of Undertaking went Beyond Debt
The tenant had obtained a stay of execution of a warrant for possession, by undertaking to discharge the arrears. He failed to pay, and the Court now considered whether such a failure was a contempt with a possible imprisonment for punishment. The . .
Cited – Prosser v Prosser ChD 2011
A consent order had been made in proceedings between two brothers which provided that the respondent should instruct the solicitors acting for him on the sale of his property that the proceeds of sale were to be remitted to a nominated bank account. . .
Cited – Graham v Graham CA 1992
. .

Lists of cited by and citing cases may be incomplete.

Insolvency, Litigation Practice

Updated: 11 December 2021; Ref: scu.654049

Re Bank of Credit and Commerce International SA (No 10): ChD 1997

An English court has power in an ancillary liquidation (provisional or final) to authorise the English liquidators to transmit the English assets to the principal liquidators in the company’s home country. The bases for this are the principles of international comity, and the desirability of a single bankruptcy administration which dealt with all the company’s assets.
Sir Richard Scott V-C said: ‘the ancillary character of an English winding up does not relieve an English court of the obligation to apply English law, including English insolvency law, to the resolution of any issue arising in the winding up which is brought before the court.’

Sir Richard Scott V-C
[1997] Ch 213
England and Wales
Cited by:
Cited – McGrath and others v Riddell and others HL 9-Apr-2008
(Orse In Re HIH Casualty and General Insurance Ltd)
HIH, an Australian Insurance company, became insolvent. An order was sought for the collection and remission of it assets in England under a letter of request from the Australia Court.
Insolvency

Updated: 11 December 2021; Ref: scu.266553

In re Cheyne Finance Plc (No 2): ChD 17 Oct 2007

The court was asked as to the treatment of the assets of the company in case of a future insolvency.
Held: Briggs J decided section 123(1)(e) required: ‘In my judgment, the effect of the alterations to the insolvency test made in 1985 and now found in section 123 of the 1986 Act was to replace in the commercial solvency test now in section 123(1)(e), one futurity requirement, namely to include contingent and prospective liabilities, with another more flexible and fact sensitive requirement encapsulated in the new phrase ‘as they fall due.”
The Byblos Bank case was a case about ability to pay debts as they became due, but the Court of Appeal had recognised that balance-sheet insolvency is not irrelevant to that issue.

Briggs J
[2007] EWHC 2402 (Ch), [2008] BCC 182, [2008] 1 BCLC 741, [2008] Bus LR 1562, [2008] 2 All ER 987
Bailii
Insolvency Act 1986 123
England and Wales
Citing:
See Also – In re Cheyne Finance Plc ChD 12-Sep-2007
The Receivers sought directions as to how to apply monies coming into their hands on the basis that, on advice, they considered that they needed the Court’s answer to an underlying difficult issue of the construction of the Security Trust Deed. The . .
Cited – Byblos Bank SAL v Al-Khudhairy CA 1987
The parties disputed the validity of the appointment of a receiver. The ostensible ground for appointment of the receiver was not made out, but the bank relied on a new ground, section 223(d) of the 1948 Act. Nicholls LJ observed: ‘Construing this . .

Cited by:
Approved – BNY Corporate Trustee Services Ltd and Others v Neuberger SC 9-May-2013
Potential Insolvency effect under guarantee
The various parties had entered into complex and substantial financial arrangements incorporating guarantees. The guarantees were conditional upon the guaranteed party being solvent. The parties disputed whether a party which would otherwise be . .

Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 10 December 2021; Ref: scu.264448

In re Cheyne Finance Plc: ChD 12 Sep 2007

The Receivers sought directions as to how to apply monies coming into their hands on the basis that, on advice, they considered that they needed the Court’s answer to an underlying difficult issue of the construction of the Security Trust Deed. The court was asked how the Receivers should apply monies coming into their hands during the period between their appointment and the happening, if one should happen, of an Insolvency Event, as defined. That turned on a question of construction of the Trust Deed. The court assumed that an Insolvency Event had not yet occurred.
Held: Pending the happening of an Insolvency Event the Receivers should apply monies coming into their hands, first, in prompt payment of the debts of Senior Creditors and any prior debts as and when they fell due; secondly, in making provision for payment of the same classes of debt not yet due and, if that left any surplus in the manner provided for in the payment priority established in clause 12.1(c) and following of the Trust Deed.

Briggs J
[2007] EWHC 2402 – 2 (Ch), [2007] EWHC 2116 (Ch), [2008] 1 BCLC 732
Bailii, Bailii
Insolvency Act 1986
England and Wales
Cited by:
See Also – In re Cheyne Finance Plc (No 2) ChD 17-Oct-2007
The court was asked as to the treatment of the assets of the company in case of a future insolvency.
Held: Briggs J decided section 123(1)(e) required: ‘In my judgment, the effect of the alterations to the insolvency test made in 1985 and now . .

Lists of cited by and citing cases may be incomplete.

Insolvency, Trusts

Updated: 10 December 2021; Ref: scu.264445

Gotham v Doodes: CA 25 Jul 2006

The former bankrupt resisted sale of his property by the trustee, saying that enforcement was barred by limitation. He and his wife bought the property in early 1988, and he was made bankrupt in October 1988. He was dischaged from bankruptcy in October 1991. In December 1990 the court answered an application for the sale of the property by the trustee with a charging order made absolute in May 1992. In 2004, the trustee again applied for possession and sale. The defendant pleaded limitation.
Held: A charge imposed under s313 of the 1986 Act secured a future obligation, and until the obligation became a present one, no right to receive the sum secured arose. Therefore time ran from the date of the order for sale, not from the date of the charge.

[2006] EWCA Civ 1080, Times 14-Aug-2006, [2007] 1 WLR 86
Bailii
Limitation Act 1980 20(1), Insolvency Act 1986 313, Trusts of Land and Appointment of Trustees Act 1996 14
England and Wales
Citing:
Cited – Hornsey Local Board v Monarch Investment Building Society CA 1889
The local authority had incurred expense in paving a street. They were entitled to apportion those expenses amongst the owners of the properties fronting onto that street and summarily to recover from the respective owners the amounts so . .
Appeal from – Doodes v Gotham, Perry ChD 17-Nov-2005
The trustee in bankruptcy had taken a charge on the property in 1992 to support the bankruptcy in 1988. He sought to enforce it in 2005. The chargor appealed an order which denied he was protected by limitation.
Held: The appeal succeeded. . .
Cited – Re Citro, Lloyds Bank plc v Byrne and Byrne, Abbey National plc v Moss and others and Barclays Bank plc v Hendricks CA 1991
Trustees in bankruptcy of bankrupt husbands successfully appealed for the removal of provisos delaying the operation of orders for sale made under s30 in respect of each husband’s matrimonial home for the benefit of that husband’s wife who had been . .
Cited – Midland Bank plc v Pike 1988
. .
Cited – Farran v Beresford HL 30-Aug-1843
The House considered the nature of scire facias, and in particular whether scire facias created a new right, or whether it only operated as a continuation of the original judgment. ‘The present right to receive the same’ was understood by Tindal . .
Cited – Earle v Bellingham 24-Jul-1857
The right to receive legacies charged on a reversionary legacy payable under the will of another was not a present right to receive them until the reversionary legacy fell into possession on the death of the life tenant. . .
Cited – Green and others v Gaul and Another; In re Loftus deceased ChD 18-Mar-2005
The claimants began an action in January 2003 to seek to set aside the appointment of an administrator from December 1991, and to have set aside transfers of property made within the estate.
Held: The limitation period against a personal . .
Cited – Wilkinson and Another v West Bromwich Building Society CA 30-Jul-2004
The Society had repossessed and sold the mortgagors’ house in 1990. It knew then that there was a shortfall, but took no further recovery proceedings until 2002. What was the date from which the relevant limitation period began to run? Though the . .
Cited – Swiss Bank Corporation v Lloyds Bank Ltd 1979
A subjective test was applied as to whether the court could find an intention to interfere with contractual relations. . .
Cited – Swiss Bank Corporation v Lloyds Bank Ltd CA 1981
An equitable charge is created when property is expressly or constructively made liable to the discharge of a debt or some other obligation, and the charge confers on the chargee a right of realisation by judicial process such as a sale order. . .
Cited – Re Owen 1894
Legacies were charged on land after the death of the life tenant. The life tenant died in 1880. It was not suggested that time ran from the death of the testator in 1854. . .

Cited by:
Cited – Yorkshire Bank Finance Ltd v Mulhall and Another CA 24-Oct-2008
The bank had obtained a judgement against the defendant, and took a charging order. Nothing happened for more than twelve years, and the defendant now argued that the order and debt was discharged.
Held: The enforcement of the charging order . .

Lists of cited by and citing cases may be incomplete.

Insolvency, Limitation

Updated: 10 December 2021; Ref: scu.243398

Re Abbot (A Bankrupt), ex parte Trustee Of The Property Of The Bankrupt v Abbot: QBD 1983

An ancillary relief order was made in December 1978, following a compromise agreement. It provided for the sale of the former matrimonial home and the payment to the wife from the proceeds of sale of andpound;18,000. The husband was adjudicated bankrupt in May 1980. The trustee applied for an order declaring that the order was void under Section 42(1) of the 1914 Act, which read: ‘Any settlement of property not being a settlement made in favour of a purchaser or incumbrancer in good faith and for valuable consideration shall if the settler becomes bankrupt within 2 years after the date of settlement, be void against the Trustee in the bankruptcy.’ A settlement included any conveyance or transfer of property.
Held: The had been dismissed because although there had been a settlement within Section 42(1), the wife was a purchaser for valuable consideration having given up her right under Section 24 for what the husband had given her. A submission by the Trustee that Section 42(1) of the 1914 Act would only not apply where proprietary interests were ordered to be transferred between the parties to ancillary relief proceedings of substantially equivalent value was rejected.
Sir Robert Megarry V-C described valuable consideration as being something ‘which has a real and substantial value, and not one which is merely nominator trivial or colourable’ and concluded that ‘a claimant who relinquishes a claim in return for a substantial sum of money is a purchaser of that sum for valuable consideration whether that sum is an accurate or inaccurate estimate of what the court would award’.

Peter Gibson J, Sir Robert Megarry V-C
[1983] Ch 45
Bankruptcy Act 1914 42(1), Matrimonial Causes Act 1973 42(1)
England and Wales
Citing:
Cited – In Re Pope ex parte Dicksee 1908
In a post-nuptial settlement, the wife had given up all her rights in return for a transfer to her of property from her husband who was later made bankrupt.
Held: Sir Herbert Cozens-Hardy MR said: ‘I am unable to adopt the view that there must . .

Cited by:
Applied – Re Kumar (A Bankrupt), ex parte Lewis v Kumar 1993
H had transferred his interest in the jointly owned matrimonial home to W for her promise to have sole liability for the mortgage debt. Nearly a year later her divorce claim for capital provision was dismissed by consent on the basis that H had . .
Cited – Hill and Another v Haines ChD 3-May-2007
The husband and wife had separated and divorced. In ancillary proceedings, the family home had been transferred to the wife under a court order. The judge had noted that the husband was hopelessly insolvent, and he was made bankrupt some time later . .

Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 10 December 2021; Ref: scu.253163

Bilta (UK) Ltd and Others v Nazir and Others: ChD 30 Jul 2012

The company was said to have engaged in a fraud based on false European Trading Scheme Allowances, and had been wound up by the Revenue. The liquidators, in the company name, now sought recovery from former directors and associates.
Held: The court dismissed the application: ‘First, the fact that there is, in accordance with my conclusions, a claim against these defendants both at common law and under s.213 Insolvency Act 1986 is no reason for extending the defence of ex turpi causa so as to provide a defence to the claim by Bilta. There will be cases in which a company is defrauded to the detriment of creditors but is not being wound up. Second, there is no risk of any of the malefactors, such as Mr Chopra, benefitting from any judgment Bilta or the Liquidators may obtain. The claim under s.213 necessarily gives rise to the discretion of the court under s.213(2). Any damages or specific relief granted in respect of Bilta’s claim can be limited and directed to the creditors’

Sir Andrew Morritt Ch
[2012] STC 2424, [2012] EWHC 2163 (Ch), [2012] WLR(D) 236, [2013] 2 WLR 825, [2013] 1 All ER 375, [2013] BCC 235, [2012] STI 2554
Bailii
Insolvency Act 1986 213, Companies Act 2006 172 180
England and Wales
Citing:
See Also – Bilta (UK) Ltd (In Liquidation) v Nazir and Others ChD 17-May-2010
The sixth defendant resisted a claim against it saying that matters between them were governed by a framework agreement which provided for matters to be resolved by arbitration. The claimant resisted, denying the arbitration agreement and saying . .
See Also – Bilta (Uk) Ltd v Nazir and Others ChD 24-Nov-2010
The company had been wound up by the Revenue on the basis that it had been used for a substantial VAT fraud. The liquidators now sued those said to have participated. A defendant denied the jurisdiction because of a disputed arbitration agreement. . .
Cited – Moore Stephens (A Firm) v Stone Rolls Ltd (in liquidation) HL 30-Jul-2009
The appellants had audited the books of the respondent company, but had failed to identify substantial frauds by an employee of the respondent. The auditors appealed a finding of professional negligence, relying on the maxim ex turpi causa non . .
Cited – Greener Solutions Ltd v Revenue and Customs FTTTx 26-Aug-2010
FTTTx INPUT TAX – MTIC fraud – whether agent’s knowledge attributed to company – no – whether company should have known of connection to fraud – no – appeal allowed . .
Cited – HMRC v Greener Solutions UTTC 18-Jan-2012
UTCC INPUT TAX – MTIC fraud – whether agent’s knowledge attributed to company – yes-appeal allowed
Greener Solutions sought repayment of the input tax incurred in respect of mobile telephones it had bought . .
Cited – West Mercia Safetywear Ltd v Dodds CA 1988
If a company continues to trade whilst insolvent but in the expectation that it would return to profitability, it should be regarded as trading not for the benefit of the shareholders, but for the creditors also. If there is a possibility of . .
Cited – Masri v Consolidated Contractors International Co Sal and Others HL 30-Jul-2009
The claimant sought to enforce a judgment debt against a foreign resident company, and for this purpose to examine or have examined a director who lived abroad. The defendant said that the rules gave no such power and they did, the power was outside . .
Cited – Ex parte Blain; In re Sawers CA 1-Aug-1879
Where legislation regulates the conduct of an individual, it may be so construed as to limit it to conduct by United Kingdom citizens anywhere.
James LJ referred to ‘broad, general, universal principle that English legislation, unless the . .
Cited – In re Seagull Manufacturing Co Ltd ChD 1992
The court considered the power of an English court over a foreign resident under section 133.
Held: In contrast with the private examination provisions, on its true construction section 133 applies to those who are within the class of persons . .
Cited – Re Paramount Airways Ltd (In Administration) CA 8-Apr-1992
It was said that there had been a transction at an undervalue within section 238. It was given effect by a transfer to a bank in Jersey, from which recovery was no sought. The bank claimed that the section did not have extra-territorial effect.
Cited – HM Revenue and Customs v Begum and Others ChD 15-Jul-2010
The Commissioners claim was founded in an alleged conspiracy from a ‘missing trader intra-community fraud’ amounting to andpound;96 million.
Held: Section 423 had extra territorial effect. . .
Cited – Re International Tin Council ChD 1987
An order for the winding up of a foreign company operates universally, applies to all the foreign company’s assets and brings into play the full panoply of powers and duties under the Insolvency Act 1986 like any other winding up order. Millett J . .
Cited – Re Howard Holdings Inc ChD 1998
It is difficult to envisage any developed system of corporate law which does not impose some obligation on directors to consider whether the company is solvent and, if not, to consider what should be done about it.
Chadwick J said: ‘I accept . .
Cited – Carman v The Kronos Group SA 2006
The court acted on the basis that section 213 of the 1996 Act had extra-territorial effect. . .

Cited by:
Appeal from – Jetivia Sa and Another v Bilta (UK) Ltd and Others CA 31-Jul-2013
Defendants appealed against refusal of their request for a summary striking out for lack of jurisdiction, of the claims against them arising from their management of the insolvency of the first defendant. . .
Appeal from – Jetivia Sa and Another v Bilta (UK) Ltd and Others SC 22-Apr-2015
The liquidators of Bilta had brought proceedings against former directors and the appellant alleging that they were party to an unlawful means conspiracy which had damaged the company by engaging in a carousel fraud with carbon credits. On the . .

Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 10 December 2021; Ref: scu.463317

In Re Daintrey, Ex Parte Holt: QBD 8 May 1893

The court was asked whether a letter could be admitted in evidence and relied upon as an act of bankruptcy. The letter was sent by the debtor to the creditor at a time when there was no dispute, headed ‘without prejudice’. It contained an offer of composition but threatening that payment would be suspended unless the offer was accepted.
Held: The court will not permit the phrase ‘without prejudice’ to be used to exclude an act of bankruptcy. The letter was admissible. There was no dispute and no offer of compromise, so the sender could not destroy the admissibility of the letter as evidence simply by heading the letter ‘without prejudice’, the protection afforded by that phrase being limited to negotiations for compromise.
Vaughan Williams J said: ‘Moreover, we think that the rule has no application to a document which, in its nature, may prejudice the person to whom it is addressed. It may be that the words ‘without prejudice’ are intended to mean without prejudice to the writer if the offer is rejected; but, in our opinion, the writer is not entitled to make this reservation in respect of a document which, from its character, may prejudice the person to whom it is addressed if he should reject the offer, and for this reason also we think the judge is entitled to look at the document to determine its character.’
He stated the conditions for the application of the ‘without prejudice’ rule as follows: ‘In our opinion the rule which excludes documents marked ‘without prejudice’ has no application unless some person is in dispute or negotiation with another, and terms are offered for the settlement of the dispute or negotiation, and it seems to us that the judge must necessarily be entitled to look at the document in order to determine whether the conditions, under which alone the rule applies, exist. The rule is a rule adopted to enable disputants without prejudice to engage in discussion for the purpose of arriving at terms of peace, and unless there is a dispute or negotiations and an offer the rule has no application. It seems to us that the judge must be entitled to look at the document to determine whether the document does contain an offer of terms. Moreover we think that the rule has no application to a document which, in its nature, may prejudice the person to whom it is addressed. It may be that the words ‘without prejudice’ are intended to mean without prejudice to the writer if the offer is rejected; but, in our opinion, the writer is not entitled to make this reservation in respect of a document which, from its character, may prejudice the person to whom it is addressed if he should reject the offer, and for this reason also we think the judge is entitled to look at the document to determine its character.’

Vaughan Williams J
[1893] 2 QB 116, [1893] UKLawRpKQB 83
Commonlii
England and Wales
Cited by:
Cited – Muller and Another v Linsley and Mortimer (A Firm) CA 8-Dec-1994
The plaintiff sued his former solicitors for professional negligence. The damages he sought to recover related to loss he suffered when dismissed as a director of a private company leading to a forced sale of his shares in the company. The plaintiff . .
Cited – Bradford and Bingley Plc v Rashid HL 12-Jul-2006
Disapplication of Without Prejudice Rules
The House was asked whether a letter sent during without prejudice negotiations which acknowledged a debt was admissible to restart the limitation period. An advice centre, acting for the borrower had written, in answer to a claim by the lender for . .
Cited – Rush and Tompkins Ltd v Greater London Council and Another HL 1988
Use of ‘Without Prejudice Save as to Costs”
A sub-contractor sought payment from the appellants under a construction contract for additional expenses incurred through disruption and delay. The appellants said they were liable to pay the costs, and were entitled to re-imbursement from the . .
Cited – Cutts v Head and Another CA 7-Dec-1983
There had been a trial of 35 days regarding rights of way over land, which had proved fruitless, and where some orders had been made without jurisdiction. The result had been inconclusive. The costs order was now appealed, the plaintiff complaining . .
Cited – Buckinghamshire County Council v Moran CA 13-Feb-1989
The parties’ respective properties were separated by a fence or hedge and the true owner had no access to the disputed land. In 1967 the Defendants’ predecessors in title began to maintain the land by mowing the grass and trimming the hedges and . .
Cited – Rush and Tomkins Ltd v Greater London Council HL 3-Nov-1988
The parties had entered into contracts for the construction of dwellings. The contractors sought payment. The council alleged shortcomings in the works. The principal parties had settled the dispute, but a sub-contractor now sought disclosure of the . .
Cited – BNP Paribas v A Mezzotero EAT 30-Mar-2004
EAT Appeal from ET’s decision, at directions hearing, permitting evidence to be adduced, at the forthcoming hearing of a direct sex discrimination and victimisation complaint, of the Applicant’s allegation that, . .
Cited – Ofulue and Another v Bossert HL 11-Mar-2009
The parties disputed ownership of land, one claiming adverse possession. In the course of negotations, the possessor made a without prejudice offer to purchase the paper owner’s title. The paper owner claimed that this was an acknowledgement under . .

Lists of cited by and citing cases may be incomplete.

Litigation Practice, Insolvency

Updated: 10 December 2021; Ref: scu.243127