Category: Insolvency

Lomax Leisure Ltd v Miller and Another: CA 9 Apr 2008

Renewed application for permission to appeal from an order dismissing a claim by Lomax as assignee of cheques issued by the liquidators of a company in members’ voluntary liquidation in payment of a dividend, and stopped by the liquidator following service of an application by a creditor disputing the liquidator’s rejection of a proof of debt.

Citations:

[2008] EWCA Civ 525

Links:

Bailii

Jurisdiction:

England and Wales

Insolvency

Updated: 18 June 2022; Ref: scu.341644

Gabriel Napier, Writer In Edinburgh v Peter Napier of Napierstoun, and Margaret Young, His Spouse: HL 29 Apr 1726

Bankrupt – A debt having been made over by a person, in favour of his wife, stante matrimonio, and by her assigned to a second husband, as part of her tocher; the assignation was found not reducible at the instance of a creditor of the first husband.

Citations:

[1726] UKHL 1 – Paton – 1, (1726) 1 Paton 1

Links:

Bailii

Jurisdiction:

Scotland

Insolvency

Updated: 17 June 2022; Ref: scu.554227

Eaton v Mitchells and Butler Plc: Misc 30 Apr 2015

Hearing to determine particular issues namely: (a) whether the current proceedings are a nullity; (b) whether the current proceedings are permitted to be validated; (c) the costs of the defendant’s application for the proceedings to be struck out; and (d) any consequential orders – claimant made bankrupt before proeedings commenced

Judges:

Keyser QC HHJ

Citations:

[2015] EW Misc B26 (CC)

Links:

Bailii

Jurisdiction:

England and Wales

Insolvency, Litigation Practice

Updated: 17 June 2022; Ref: scu.551738

In Re the Working Project Ltd; In Re Fosterdown Ltd and Others: ChD 27 Oct 1994

Company disqualification proceedings may conclude in the county court after a winding up of the company in that court. The power to disqualify directors survives the finishing of the winding up of the company, even though the Official Receiver had had no right to commence the proceedings and the County Court had had no jurisdiction to hear them.

Judges:

Carnwath J

Citations:

Times 27-Oct-1994, Ind Summary 28-Nov-1994, [1995] BCC 197

Statutes:

Company Directors Disqualification Act 1986 6(3)

Jurisdiction:

England and Wales

Cited by:

Cited – Re NP Engineering and Security Products Ltd; Official Receiver and Another v Pafundo and Another CA 22-Oct-1996
The official receiver began director disqualification proceedings, but before the proceedings commenced, the company was wound up. Where, on an application for the disqualification of a director, the official receiver and the Secretary of State . .
Lists of cited by and citing cases may be incomplete.

Company, Insolvency

Updated: 17 June 2022; Ref: scu.82247

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 on his own petition. The trustees appealed refusal of the court to set aside the transfer.
Held: A transfer made under such an order was not a transfer of value. Many factors of no relevance to the Insolvency Acts were to be taken into account. The wife had not given up all her rights under the Act, since a furthe rapplication remained possible. It was a transfer at an under-value, and the court did not have the discretion sought.

Judges:

Pelling QC J

Citations:

[2007] EWHC 1012 (Ch), Times 14-May-2007

Links:

Bailii

Statutes:

Insolvency Act 1986 339, Matrimonial Causes Act 1993 39

Jurisdiction:

England and Wales

Citing:

Cited – Re Thoars (Dec’d); Reid v Ramlort Ltd ChD 2003
The company claimed the benefit of an insurance policy. They had paid certain premiums and the trustee had made a declaration that it was held on trust for the company. The insured died in Scotland, intestate and insolvent.
Held: The . .
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 – 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 . .
Cited – 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 – Ramlort Ltd v Michael James Meston Reid CA 8-Jul-2004
The company sought to claim under a life policy. The deceased had died in Scotland insolvent. The trustee of the policy had declared that he held it on trust for the claimant, but the defendant, the judicial factor of the estate, said the . .
Cited – Xydhias v Xydhias CA 21-Dec-1998
The principles of contract law are of little use when looking at the course of negotiations in divorce ancillary proceedings. In the case of a dispute the court must use its own discretion to determine whether agreement had been reached. Thorpe LJ . .
Cited – G v G (Minors: Custody Appeal) HL 25-Apr-1985
The House asked when a decision, on the facts, of a first instance court is so wrong as to allow it to be overturned on appeal.
Held: The epithet ‘wrong’ is to be applied to the substance of the decision made by the lower court. ‘Certainly it . .
Cited – McMinn v McMinn 2003
A section 27 claim cannot be pursued by a surviving spouse. Black J said: ‘It is clearly established that until an ancillary relief order has been made, an ancillary relief claim is not a cause of action. This appears to be because of the . .
Cited – Albert v Albert 1996
The court considered the duty of a family court when deciding ancillary relief applications where the husband is bankrupt. Millett LJ said: ‘The Family Division is concerned to ascertain the amount of the bankrupt’s income and to decide how much of . .
Lists of cited by and citing cases may be incomplete.

Insolvency, Family

Updated: 17 June 2022; Ref: scu.251817

In re Derfshaw Ltd and Others: ChD 2 Jun 2011

The court considered applications for administration orders made by six companies at the instigation of directors of those companies, and the appointment of administrators with retrospective effect.
Held: Morgan J said that he could see scope for argument as to the correctness of G-Tech Construction Limited, but that the desirability of making retrospective orders was considerable, and that since the authority for making such orders existed he felt he ought to follow the lead of Hart J.

Judges:

Morgan J

Citations:

[2011] EWHC 1565 (Ch)

Links:

Bailii

Jurisdiction:

England and Wales

Citing:

Cited – In re G-Tech Construction Limited ChD 29-Sep-2005
In appointing the administrators, the wrong form had been used. The court was asked to use its powers to cure the mistake. The failure to file the correct form was overlooked, with the result that one of the prerequisites of an appointment taking . .

Cited by:

Cited – In re Care Matters Partnership Ltd ChD 7-Oct-2011
An application was made for the appointment of administrators with retrospective effect.
Held: ‘there are two separate questions. The first question is whether an administration order should be made at all. This requires both the satisfaction . .
Lists of cited by and citing cases may be incomplete.

Company, Insolvency

Updated: 17 June 2022; Ref: scu.441062

In Re Richbell Information Services Inc: ChD 21 Jan 1999

A petition for the winding up of a company where that company appeared to have a substantial cross claim which might set off and exceed the debt on which it was based, might go ahead where the interests of the company and the creditors might so better be protected.

Citations:

Times 21-Jan-1999

Jurisdiction:

England and Wales

Insolvency

Updated: 17 June 2022; Ref: scu.82151

Inland Revenue Commissioners v Adam and Partners Ltd: ChD 2 Aug 1999

The nature of a scheme of arrangement was not closely defined, and an arrangement with creditors could be described as such even though it might give no prospect of a payout to the creditors. A voluntary arrangement approved by a majority of the creditors was binding on the Inland Revenue even though no dividend might become payable under it.

Citations:

Times 02-Aug-1999

Jurisdiction:

England and Wales

Insolvency

Updated: 17 June 2022; Ref: scu.82338

Inland Revenue Commissioners v Duce and Another: ChD 29 Dec 1998

Deliberate concealment of arrangements for sale of assets at an undervalue to associate justified revocation of a voluntary arrangement, but the court must look at the heinousness of the irregularity before deciding as to future conduct of arrangements.

Citations:

Times 29-Dec-1998

Statutes:

Insolvency Act 1986 262(4)(b)

Jurisdiction:

England and Wales

Insolvency

Updated: 17 June 2022; Ref: scu.82341

In re Luna Metal Products Ltd (in Administration): CA 14 Dec 2006

The administrators held cash. They proposed a distribution giving creditors who would on a winding up be preferential, full preference. They appealed refusal by the court to sanction the proposal.
Held: The court had no power to make such an order. From the cases there were three sources for the court’s power to sanction, or order, an administrator to make pro rata payments to creditors, section 14(3), the court’s inheremt jurisdiction, and the powers in Schedule 1 and the court’s powers in 18(3). Section 14(3) envisaged the court giving an administrator directions but they had to be in connection with the carrying out of his functions which were governed by section 8(3) of, and Schedule 1 to the 1986 Act did not extend to paying out creditors. Section 18(3) could not be used independently of an application under 18(1). The court did not terefore have the power sought. However if the distribution was sought as part of an the now amended application under 18(1) for the completion of the administration, the distribution would avoid the need for a winding up, and would save costs.

Judges:

Lord Justice Tuckey, Lord Justice Carnwath and Lord Justice Neuberger

Citations:

Times 27-Dec-2006

Statutes:

Insolvency Act 1986 18(3)

Jurisdiction:

England and Wales

Citing:

Cited – In Re Powerstore (Trading) Ltd; In Re Homepower Stores Ltd ChD 18-Jun-1997
A court has no jurisdiction to make an order which seeks to bind future decisions of future liquidator in favour of group of creditors. . .
Cited – Stallwood v David and Another QBD 25-Oct-2006
The parties experts had met and agreed evidence, but the claimant’s expert later changed his mind. She now appealed being refused permission to bring additional evidence.
Held: The meeting of experts was to encourage them to seek agreement. . .
Cited – In re Designer Room Ltd ChD 2005
. .
Not followed – In re Mark One (Oxford Street) plc 1999
Jacob J referred to the inherent jurisdiction of the court with particular reference to Ex parte James. . .
Approved – In re UCT (UK) Ltd ChD 2001
Arden J was asked to approve aproposal that the company should go into voluntary liquidation, on the basis that, prior to that happening, the administrators would pay into a trust account in their own name a sum equal to the total amount owing to . .
Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 14 June 2022; Ref: scu.247765

Moore (T/A James Moore Earth Moving) v Inland Revenue: ChNI 5 Dec 2001

Appeal against conditional setting aside of statutory demand.

Judges:

Girvan J

Citations:

[2001] NICh 15

Links:

Bailii

Citing:

Cited – In re a Debtor (No 1 of 1987), ex parte the Royal Bank of Scotland CA 1989
A statutory demand as served showed an incorrectly calculated sum owed and was in the wrong form.
Held: The application to set the demand aside was refused. A statutory demand should not be set aside for a mere technicality.
Lord Justice . .
Lists of cited by and citing cases may be incomplete.

Northern Ireland, Insolvency

Updated: 13 June 2022; Ref: scu.202039

Harmon CFEM Facades (UK) Ltd v The Corporate Officer of the House of Commons: TCC 29 Jun 2000

The company began a claim for damages for the failure to complete an award of a contract, but then went into voluntary liquidation. The defendant refused payment claiming that it would be used only for payment of the insolvency practitioner’s costs. The new CPR rules disapplied old assumptions, and the overriding objective should apply. An interim payment was ordered limited to reflect the risk of a failure to secure recovery in the case of a failure of the action.

Citations:

Gazette 20-Jul-2000, [2000] EWHC Technology 84

Links:

Bailii

Citing:

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: . .
See Also – Harmon CFEM Facades (UK) Limited v The Corporate Officer of The House of Commons TCC 28-Oct-1999
The claimant said that the respondent had awarded a contract for works at the House of Commons disregarding its obligations under European law as regards open tendering. . .

Cited by:

See Also – Harmon CFEM Facade (UK) Ltd (In Voluntary Liquidation) v Corporate Officer of the House of Commons QBD 15-Nov-2000
If an award of interim damages was properly payable, then it remained payable notwithstanding that the claimant was impecunious, and that in principle the damages might be come repayable where the claimant could have become unable to repay. It was . .
Lists of cited by and citing cases may be incomplete.

Insolvency, Company, Litigation Practice, Landlord and Tenant

Updated: 13 June 2022; Ref: scu.201812

Scribes West Limited v Relsa Anstalt and Another (No 2) (Practice Note): CA 20 Jul 2004

The court gave guidance on the destination of appeals from county court cases. It was vital to identify the precise nature of the order under appeal: ‘The judges of this court (and the staff at the Civil Appeals Office) have to interpret the order of the lower court as we find it. The relevant decision is the Court’s order, and the Destination Order determines where appeal should lie from that order . . The appeal court must be the one that is readily ascertainable from the face of the court’s order, and not one which would or might have been ascertainable if the judge had made a different order. It would be intolerable if appeal courts had to be subjected to a complicated examination of the types of order that might have been made if the parties had dealt with things differently in the lower court, merely for the purpose of determining whether they possess jurisdiction. The destination of the appeal should be ascertainable from the language of the order.’

Judges:

Lord Justice Mance Lord Justice Brooke Lord Justice Dyson

Citations:

[2005] 1 WLR 1839, [2004] EWCA Civ 965, [2004] 4 All ER 653

Links:

Bailii

Jurisdiction:

England and Wales

Citing:

See Also – Scribes West Limited v Relsa Anstalt and Another (No 1) CA 1-Jul-2004
The court handed down a New Practice Direction 52 for grounds of appeal, decisions in permissions to appeal, notices to respondents of appeals, appeal bundles etc. . .

Cited by:

See Also – Scribes West Ltd v Relsa Anstalt and others CA 20-Dec-2004
The claimant challenged the forfeiture of its lease by a freeholder which had acquired the registered freehold title but had not yet registered its ownership. The second defendant had forfeited the lease by peacable re-entry for arrears of rent, and . .
Cited – Neina Graham v Chorley Borough Council CA 21-Feb-2006
The defendant had submitted after the close of the claimant’s case that it had no case to answer. The judge did not put the defendant to its election as to whether to call evidence, but instead decided to accede to the submission. The claimant now . .
Lists of cited by and citing cases may be incomplete.

Landlord and Tenant, Insolvency, Litigation Practice

Updated: 11 June 2022; Ref: scu.199314

In the Matter of Telewest Communications Plc and in the Matter of Telewest Finance (Jersey) Ltd: ChD 22 Jun 2004

Richards J said: ‘In considering the primary position of the Opposing Bondholders, it is important to keep in mind the function of the court at this stage. This is an application by the companies for leave to convene meetings to consider the schemes. It is emphatically not a hearing to consider the merits and fairness of the schemes. Those aspects are among the principal matters for decision at the later hearing to sanction the schemes, if they are approved by the statutory majorities of creditors. The matters for consideration at this stage concern the jurisdiction of the court to sanction the scheme if it proceeds. There is no point in the court convening meetings to consider the scheme if it can be seen now that it will lack the jurisdiction to sanction it later. This is principally a matter of the composition of classes. Under section 425, the court will have no jurisdiction to sanction the scheme if the classes have been incorrectly constituted. It is perhaps unfortunate that this is the case and there is much to commend an approach which enables the court to sanction a scheme in an appropriate case, where the classes have been incorrectly constituted in a way which would not have affected the outcome of the meetings. But that is not the position under section 425 and the practice now is to deal so far as possible with issues of class composition at the first stage of the application for leave to convene meetings. There might exceptionally be other issues which would go to jurisdiction and could properly raised at this stage: see re Savoy Hotel Ltd [1981] Ch. 351. What the court should not do is consider the fairness of the scheme with a view to deciding whether at the later hearing it will or will not sanction it.
If the Opposing Bondholders’ position is that the inclusion of the Average Exchange Rate produces so unfair a result that no court would sanction the scheme, that as it seems to me can and should be considered at the hearing to sanction the scheme . . .’

Judges:

Mr Justice Richards

Citations:

[2004] EWHC 1466 (Ch)

Links:

Bailii

Statutes:

Companies Act 1985 425

Cited by:

Cited – Mytravel Group Plc, Re Companies Act 1985 ChD 24-Nov-2004
The company sought approval of a proposed reconstruction under the section.
Held: Approval could not be given. To count as a reconstruction two principal qualities were required. The business carried on should be the same or similar, and those . .
Lists of cited by and citing cases may be incomplete.

Company, Insolvency

Updated: 11 June 2022; Ref: scu.198300

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 proceeds passed immediately to the bank, subject to its contract with the customer. The duty to pay over the balance held in an account was contractual not proprietary. It was not satisfactory that the question of whether a charge was fixed or floating should turn upon the precise and particular relationship between the bank and its customer. Payment of sums into the bank account counted as a part repayment of the company’s borrowings.

Judges:

Lord Phillips of Worth Matravers, Mr Lord Justice Jonathan Parker and Lord Justice Jacob

Citations:

[2005] 2 All ER 1000, [2004] All ER (D) 390, Times 04-Jun-2004, Gazette 10-Jun-2004, [2004] EWCA Civ 670

Links:

Bailii

Jurisdiction:

England and Wales

Citing:

Appeal from – 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 – 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 – 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 – Robson v Smith 1895
The court approved the statement that floating charges ‘constitute a charge but give a licence to the company to carry on its business’. . .
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 – 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 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 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 – Griffiths and Another v Yorkshire Bank Plc and Others ChD 7-Oct-1994
The court considered the application of a company’s assets as between debenture holders and other chargees upon the insolvency of the company. It was the essence of a floating charge that the company could create a prior fixed charge over the asset. . .
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 – 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 – English and Scottish Mercantile Investment Co Ltd v Brunton CA 1892
A debenture contained provisions that would normally have created a simple floating charge but which included a restriction on the chargor company from granting any prior charge on the assets in question. The chargor subsequently granted a charge . .
Cited – Re Atlantic Medical Ltd 1992
A charge was granted over hire-purchase agreements, sub-leases and rentals of leased equipment. The charge extended to such agreements as the chargor might enter into in the future.
Held: Applying Atlantic computers, the charge was a fixed . .
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 ASRS Establishment Ltd (In Administrative Receivership and Liquidation) ChD 17-Nov-1999
Although the parties should be free to make the agreement they wanted to, and the court should listen, that would not mean that assets which were incapable of being made subject to a fixed charge could be made so by the joint intention of the . .
Cited – Royal Trust v National Westminster Bank plc CA 1996
A charge was given over the benefits of hire purchase and leasing agreements. The terms of the charge entitled the chargee to require payments under the agreements to be paid into a special account, but the chargee never in fact did so and the . .
Cited – Re: New Bullas Trading Ltd ChD 5-Apr-1993
A fixed charge in a debenture without restrictions on dealing with monies received must be a floating charge. . .

Cited by:

Cited – Quickson (South and West) Limited v Stephen Mark Katz, John Stephen Kelmanson (As Joint Liquidators of Buildlead Limited) ChD 25-Aug-2004
Various applications were made in the insolvency, including for removal of the liquidators and declarations that certain payments were a fraudulent preference on the creditors.
Held: No prejudice had been shown by any procedural irregularity. . .
Appeal from – 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.

Banking, Insolvency

Updated: 11 June 2022; Ref: scu.197967

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 administrators to assist it identifying who might else be liable.
Held: The claimant could rely upon the 1930 Act which was not restricted solely to liabilities in tort. There had been differing interpratations of the Act, but not so as to demonstrate any ambiguity in the Act so as to allow admission of parliamentary evidence under Pepper v Hart. Lord Justice Longmore: ‘the question of the date of transfer to the third party of the rights of the insured against the insurer should now . . be regarded as conclusively determined . . in favour of the view that the transfer takes place on the event of insolvency.’

Judges:

Lord Justice Kay, Lord Justice Longmore, Lord Justice Parker

Citations:

[2004] EWCA Civ 653, Times 31-May-2004, [2004] Ch 317

Links:

Bailii

Statutes:

Third Parties (Rights Against Insurers) Act 1930, Consumer Credit Act 1974

Jurisdiction:

England and Wales

Citing:

Cited – Hood’s Trustees v Southern Union General Insurance Company of Australasia Ltd 1928
H, being insured by the defendant company against liability to third parties, negligently injured C in a road accident. C subsequently brought an action against H for damages, but before he could obtain judgment, H was made bankrupt and the official . .
Cited – Re Harrington Motor Co Ltd, Ex parte Chaplin 1928
A person injured in a road accident had obtained judgment for damages against the company, but had been unable to enforce the judgment before the company went into liquidation. The company’s motor insurers paid the amount of the judgment to the . .
Cited – In re Compania Merabello San Nicholas SA ChD 1973
A petition to wind up a one-ship Panamanian company was brought by a claimant cargo-owner who had ‘an unliquidated claim against the company for breach of [a] contract of carriage in respect of the shortages and for damages based on [the vessel] . .
Cited – CVG Siderurgicia del Orinoco SA v London Steamship Owners’ Mutual Insurance Association Limited ‘The Vainqueur Jose’ 1979
The plaintiff sought to claim under the rules of the P and I club of which it was a member. After defining the risks in respect of which members were to be indemnified, the rules made the following proviso in Rule 8(k): ‘A member shall at the . .
Cited – The Fanti and The Padre Island CA 1989
. .
Not good Law – 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 . .
Limited – 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 . .
Cited – Woolwich Building Society v Taylor and Another ChD 17-May-1994
A person requesting third party information under the Act, must first establish a claim sufficient to justify the right claimed. The third party claimant’s right against the insured arose at the time when the claimant suffered a loss but that the . .
Cited – Post Office v Norwich Union Fire Insurance Society Ltd CA 1967
A contract of insurance provided an indemnity for ‘all sums which the insured shall become legally liable to pay as compensation in respect of loss of property’. The claim was by the Post Office against a contractor, Potters, for damaging one of . .
Cited – Bradley v Eagle Star Insurance Co Ltd HL 1989
Mrs Bradley was employed by Dart Mill several times from 1933 and 1970 and acquired byssinosis from inhaling cotton dust. The company was wound up in 1975 and dissolved in 1976. In 1984 she applied to the court for pre-action disclosure under . .
Not good law – Nigel Upchurch Associates v The Aldridge Estates Investment Co Ltd 1993
. .
Cited – Cox v Bankside Members Agency Ltd and Others QBD 27-Jan-1995
Some agents had policies against which there were likely to be various calls, either because several claims were being pursued against the same agents by different Lloyd’s Names, or because the policies were group policies covering several agents . .
Dicta adopted – Cox v Bankside Members Agency Ltd and Others CA 16-May-1995
Successful Lloyds names were entitled to enforce their claims in the normal time sequence. The transfer of the rights of the insured against the insurer under section 1(1) the 1930 Act takes place on the event of insolvency, even if the insured’s . .
Cited – Centre Reinsurance International Co and Another v Curzon Insurance Ltd ChD 12-Feb-2004
It was a necessary part of the system of statutory transfers of insurance obligations under the Act, that the rights should be transferred before exhaustion of any policy excess, and notwithstanding the insolvency. The rights (inchoate at this . .
Appeal From – OT Computers v First National Tricity Finance ChD 2003
. .

Cited by:

Cited – Freakley and Curzon Insurance Ltd v Centre Reinsurance International Company and Another; similar CA 11-Feb-2005
Claims were made for personal injury caused by asbestos. The re-insurers sought declaratory relief against the head insurers, and the administrators of the insolvent company. The administrators sought declarations in turn. Curzon insured the company . .
Cited – Law Society of England and Wales and others v Shah and others ChD 30-Nov-2007
Solicitor firms had been made bankrupt leaving a shortfall after thefts from client accounts of over 12 million pounds. The thief had diappeared, and the other partners were now discharged form bankruptcy. The Law Society accepted that it could not . .
Lists of cited by and citing cases may be incomplete.

Insurance, Insolvency

Updated: 11 June 2022; Ref: scu.197805

Commissioners of Inland Revenue v The Wimbledon Football Club Limited, Ellis, Earp: CA 28 May 2004

The Commissioners appealed against a refusal of their application for a revocation of the defendant’s voluntary arrangement in that it had failed to comply with section 4. They complained that the arrangement was unfair to them. It had been agreed to pay football creditors in full at the expense of others, in order to avoid penalties imposed by the Football League.
Held: The purchasers agreed to pay the football debts from their own assets. The voluntary arrangement dealt with the unpaid creditors. The scheme of arrangements system is intended to be flexible, and this scheme was proper.

Judges:

Lord Justice Mance Lord Chief Justice Of England And Wales Lord Justice Neuberger

Citations:

[2004] EWCA Civ 655

Links:

Bailii

Statutes:

Insolvency Act 1986 6 4(4)(a)

Jurisdiction:

England and Wales

Citing:

Cited – Buchler and another (as joint liquidators of Leyland DAF Limited) v Talbot and another (as joint administrative receivers of Leyland DAF Limited) and Stichting Ofasec and others HL 4-Mar-2004
The liquidator sought to recover his expenses from assets charged under a floating charge in priority to the chargee.
Held: Barleycorn was decided in error. The liquidators costs incurred in an insolvent winding up were not to be charged . .
Cited – Somji v Cadbury Schweppes Plc CA 20-Dec-2000
Where a party’s agreement to an individual voluntary arrangement had been obtained by an advantage offered to that creditor but not disclosed to others, the entire arrangement could be set aside. In this case the offer to purchase a debt after the . .
Cited – Bristol Airport Plc and Another v Powdrill and Others CA 21-Dec-1989
An airline company went into administration. The airport seized two airplanes. The administrators claimed they were property within the administration, could not be seized without a court order, and the court should exercise its discretion not to . .
Cited – British Eagle International Airlines Ltd v Compagnie National Air France HL 1975
British Eagle, which had gone into liquidation. The parties disputed a contract attempting to reset the ranking of debts. The House was asked whether there was a debt due to the insolvent company at the commencement of its winding-up, to which the . .
Appeal from – The Commissioners of the Inland Revenue v Wimbledon Football Club Ltd and Others ChD 11-May-2004
. .

Cited by:

Appealed to – The Commissioners of the Inland Revenue v Wimbledon Football Club Ltd and Others ChD 11-May-2004
. .
Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 11 June 2022; Ref: scu.197867

Re Alabama, New Orleans, Texas and Pacific Junction Railway Company: CA 1891

The question is whether a scheme of arrangement: ‘was at least so far fair and reasonable, as that an intelligent and honest man, who is a member of that class [to whom the scheme is put], and acting alone in respect of his interest as such a member, might approve of it.’
Bowen LJ: ‘It is in my judgment desirable to call attention to this section, and to the extreme care which ought to be brought to bear upon the holding of meetings under it. It enables a compromise to be forced upon the outside creditors by a majority of the body, or upon a class of the outside creditors by a majority of that class. It would be most unjust to bind creditors or classes of creditors by the decision of three-fourths in value of those who attend a particular meeting, unless you have secured that the meeting shall adequately represent the entire body. But the section makes no provision for that, except by enacting that the meeting is to be held in the manner in which the Court shall direct.’

Judges:

Fry LJ, Bowen LJ

Citations:

[1891] 1 Ch 213

Jurisdiction:

England and Wales

Cited by:

Cited – Cape Plc and Others, Re Companies Act 1985 ChD 16-Jun-2006
The court was asked to sanction a scheme of arrangements, and particularly to approve a proposed scheme which itself contained the power to make amendments to the scheme.
Held: The court did have power to sanction such a proposed scheme of . .
Lists of cited by and citing cases may be incomplete.

Company, Insolvency

Updated: 11 June 2022; Ref: scu.219201

Khan v Trident Safeguards Ltd and others: CA 19 May 2004

The claimant had ben made bankrupt. The defendant argued that his claim vested in the trustee.
Held: A discrimination claim was hybrid in nature rather than purely personal, and so it vested in the trustee. However the real issue was the actual claim made. In this case the claimant could seek only the personal elements for damages to injured feelings. If the claim was so limited, it would cease to be a hybrid claim, and he would have the right to bring the action.

Judges:

The Hon Mrs Justice Arden Dbe Lord Justice Buxton Lord Justice Wall

Citations:

[2004] EWCA Civ 624, Times 28-May-2004

Links:

Bailii

Jurisdiction:

England and Wales

Citing:

Cited – Ord v Upton CA 7-Jan-2000
A bankrupt labourer (aged 30) after the bankruptcy order issued a writ against a doctor who had treated him for back pain before the bankruptcy order, claiming damages for negligence, including damages for pain and suffering as well as damages for . .
Cited – Mulkerrins v Pricewaterhouse Coopers HL 31-Jul-2003
The claimant sought damages from her former accountants for failing to protect her from bankruptcy. The receiver had unnecessarily caused great difficulties in making their claim that such an action vested in them. The defendants had subsequently, . .
See Also – Khan v Trident Safeguards Ltd and others EAT 6-Nov-2000
. .
See Also – Khan v Trident Safeguards Ltd and others EAT 22-Oct-2001
. .
Cited – Khan v Trident Safeguards Ltd and others EAT 24-Jun-2002
. .
See Also – Khan v Trident Safeguards Ltd EAT 15-Jan-2003
. .
See Also – Khan v Trident Safeguard Ltd, North British Housing; Noke Rodgers EAT 25-Feb-2003
EAT Insolvency
EAT Insolvency – (no sub-topic) . .

Cited by:

See Also – Khan v Trident Safeguards Limited, Shaw, King, Wright, Harman EAT 6-May-2005
EAT Race Discrimination – Direct – Victimisation. . .
Lists of cited by and citing cases may be incomplete.

Employment, Insolvency, Discrimination

Updated: 10 June 2022; Ref: scu.197050

Popely v Popely: CA 30 Apr 2004

The expression ‘cross-demand’ in rule 6.5(4)(a) did not imply any kind of procedural or juridical relationship to the debt subject to the statutory demand. All it meant was that the demand was one that went the other way, i.e. was a demand by the debtor on the creditor. The cross-claim must still be one which can be characterised as genuine and serious, or of substance.

Judges:

Mr Justice Moses Lord Justice Ward Lord Justice Jonathan Parker

Citations:

[2004] EWCA Civ 463, [2004] BPIR 778

Links:

Bailii

Statutes:

Insolvency Rules 1986 (SI 1986/1925) 6.5(4)(a)

Jurisdiction:

England and Wales

Citing:

Appeal from – Popely v Popely ChD 25-Jul-2003
The claimant appealed refusal to set aside a statutory demand served by the defendant. The parties had become embroiled in criminal proceedings and the defendant sought recovery of assets from the claimant. In those proceedings a costs order had . .
Applied – Seawind Tankers Corporation v Bayoil SA CA 12-Oct-1998
Although a company admitted a debt, it was nevertheless right to set aside a petition for winding up under that debt, where the company had an unquantified but greater counterclaim within the same proceedings, even if that claim could not presently . .
See Also – Popely v Popely CA 3-Oct-2002
. .

Cited by:

Cited – Bryce Ashworth v Newnote Ltd CA 27-Jul-2007
The appellant challenged a refusal to set aside a statutory demand, in respect of his director’s loan account with the respondent company, saying the court should have accepted other accounts to set off against that debt.
Held: A statutory . .
Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 10 June 2022; Ref: scu.196628

Secretary of State for Trade and Industry v Frid: HL 13 May 2004

The company went into insolvent liquidation. The secretary of state was to make payments to employees and there were other state preferential creditors. At the same time a refund of VAT was due from the Commissioners of customs and Excise.
Held: The sums paid out and preferential debts could be set off against the VAT refund. It was not necessary that the debt should have been due and payable before the insolvency date. It is sufficient that there should have been an obligation arising out of the terms of a contract or statute by which a debt sounding in money would become payable upon the occurrence of some future event or events. The appeal was allowed.

Judges:

Lord Nicholls of Birkenhead, Lord Hoffmann, Lord Hope of Craighead, Lord Phillips of Worth Matravers, Lord Brown of Eaton-under-Heywood

Citations:

[2004] UKHL 24, Times 14-May-2004, [2004] 2 AC 506, [2004] BPIR 841, [2004] 2 BCLC 1, [2004] 2 WLR 1279, [2004] 2 All ER 1042

Links:

House of Lords, Bailii

Statutes:

Insolvency Rules 1986 4.90

Jurisdiction:

England and Wales

Citing:

Cited – Stein v Blake HL 18-May-1995
Where A and B each have claims against each other and A is insolvent, the common amount is set off, and the net difference remains as a debt due.
Hoffmann L said: ‘It is a matter of common occurrence for an individual to become insolvent while . .
Cited – In re Charge Card Services Ltd ChD 1987
The court discussed the historic availability of set-off in an insolvency: ‘By the turn of the [20th] century, therefore, the authorities showed that debts whose existence and amount were alike contingent at the date of the receiving order, and . .
Cited – In re Fenton CA 1931
A surety under a pre-insolvency guarantee, had not actually paid, and could not pay, being bankrupt with his assets vested in the trustee. The creditor was still owed the money and entitled to prove in the liquidation.
Held: One could not have . .
Incorrect – In re A Debtor (No 66 of 1955), Ex parte The Debtor v Trustee of Waite (A Bankrupt) CA 2-Jan-1956
Waite owed the debtor andpound;101 for goods sold and delivered. He was bankrupted, having previously guaranteed the debtor’s overdraft and deposited the deeds of his property as security. Waite’s trustee paid the bank andpound;133 out of the . .
Cited – In re A Debtor (No 66 of 1955), Ex parte The Debtor v Trustee of Waite (A Bankrupt) ChD 1956
Waite owed money and guaranteed a debt before being made bankrupt. Waite and his trustee were not for this purpose the same person. Waite had held his assets for his own benefit. The trustee paid the debt.
Held: The trustee held the assets . .
Cited – In re Moseley-Green Coal and Coke Co Ltd, Ex parte Barrett 1865
Mr Barrett owed the company money on his partly-paid shares for which calls were made after it went into insolvent liquidation. He had also guaranteed the company’s liability for the purchase price of a coal mine, for which the vendor held security . .
Cited – Mann and others v Secretary of State for Employment HL 8-Jul-1999
When acting effectively as a guarantor of a company’s obligations to its employees upon insolvency in paying unpaid wages, the Secretary of State for Employment was entitled to set off against those payments, payments made by way of compensation by . .
Cited – In re D H Curtis (Builders) Ltd ChD 1978
Debts were, on the one side, the liability of the company to the Inland Revenue and the Department of Health and Social Security for PAYE and National Insurance contribution respectively and, on the other, the liability of HM Customs and Excise to . .
Cited – Swain v The Law Society HL 1983
The Solicitors’ Practice Rules had the force of a statute, being rules made by the Council of the Law Society with parliamentary sanction for the protection of that section of the public who might be in need of legal advice, assistance or oversight. . .
Cited – Booth v Hutchinson 1872
The additional words in the new Act relating to set-off ‘were intended to give a more extended right of set-off than previously existed’ . .
Cited – Peat v Jones and Co 1881
Sir George Jessel MR said: ‘Now the enactment as to ‘mutual credits’ is a very old one, first appearing in 5 Geo 2, c 30, but the whole tendency of the subsequent legislation, as of the legislation respecting proveable debts, has been to extend the . .

Cited by:

Cited – Wilkinson, Regina (on the Application Of) v Inland Revenue HL 5-May-2005
The claimant said that the widows’ bereavement tax allowance available to a wife surviving her husband should be available to a man also if it was not to be discriminatory.
Held: Similar claims had been taken before the Human Rights Act to the . .
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 Kaupthing Singer and Friedlander Ltd SC 19-Oct-2011
The bank had been put into administrative receivership, and the court was now asked as to how distributions were to be made, and in particular as to the application of the equitable rule in Cherry v Boultbee in the rule against double proof as it . .
Cited – In re SSSL Realisations (2002) Ltd and Another; Squires and others v AIG Europe (UK) Ltd and Another CA 18-Jan-2006
A creditor claiming an equity in a debt but who himself owed money to the debtor, could not pursue his claim without first contributing the sum due. A person could not take an aliquot share out of a fund without first contributing what he owed to . .
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 . .
Lists of cited by and citing cases may be incomplete.

Benefits, Insolvency

Updated: 10 June 2022; Ref: scu.196759

Haly v Barry: CA 1868

A judgment creditor had obtained a charging order nisi but before it was made absolute a decree was made for the administration of the debtor’s estate. An injunction was sought in order to restrain further proceedings by the judgment creditor, but that was refused on the basis that the charging order nisi having been made, it could only be defeated by something prior to it. The Master held that the charging order nisi was not to be regarded as something different from the charging order absolute.
Held: A charging order absolute takes effect from the date of the charging order nisi. Page Wood LJ said ‘I do not think that such a case can be treated as one in which the creditor’s title is incomplete.’ Selwyn LJ: ‘The language of the [Common Law Procedure Act 1852] appears to me quite opposed to this view, it speaks of one order which is at first an order nisi and is afterwards made absolute.’

Judges:

Page Wood LJ

Citations:

(1868) 3 Ch App 452

Jurisdiction:

England and Wales

Cited by:

Overruled – Clarke v Coutts and Co CA 17-Jun-2002
The respondent bank had obtained a charging order nisi against the applicant’s property. The applicant then obtained an order under s252 of the act requiring any further action against his estate to be stayed. The bank nevertheless obtained an order . .
Cited – Brereton v Edwards 1888
Money in the control of the Court may be the subject of execution with the leave of the Court. The Judgments Acts did not apply to money held in Court. Lord Esher MR said: ‘section 14 does not apply to money . . it applies only to Government stock, . .
Lists of cited by and citing cases may be incomplete.

Insolvency, Litigation Practice

Updated: 10 June 2022; Ref: scu.182280

In re The Arena Corporation Limited; Commissioners for Customs and Excise v The Arena Corporation Limited; the Arena Corporation Limited v Schroeder: CA 25 Mar 2004

Sir Andrew Morritt V-C said that in the context of winding up proceedings the test for whether there is a genuine triable issue in a disputed claim, is whether the debt is bona fide disputed on substantial grounds, which, for practical purposes, is synonymous with ‘real as opposed to frivolous.’

Judges:

Lord Justice Mance Vice-Chancellor, The Vice-Chancellor Lord Justice Carnwath

Citations:

[2004] EWCA Civ 371, [2004] BPIR 415

Links:

Bailii

Statutes:

Insolvency Act 1986

Jurisdiction:

England and Wales

Citing:

Appeal from – The Commissioners for Customs and Excise, The Arena Corporation Limited v The Arena Corporation Limited / Schroeder ChD 12-Dec-2003
. .

Cited by:

Cited – Bryce Ashworth v Newnote Ltd CA 27-Jul-2007
The appellant challenged a refusal to set aside a statutory demand, in respect of his director’s loan account with the respondent company, saying the court should have accepted other accounts to set off against that debt.
Held: A statutory . .
Cited – Re Autotech Design Ltd, HMRC v Autotech Design Ltd ChD 2006
Michael Briggs QC summarised the approach to be adopted by the court at the hearing of for the appointment of an interim liquidator pending the hearing of an insolvency petition brought by the Revenue: ‘Although the formulations of the approach to . .
Cited – Revenue and Customs v SED Essex Ltd ChD 14-Jun-2013
Liquidator confirmed despite VAT challege
The Revenue sought the winding up of the company for non-payment of substantial arrears of VAT. The revenue had declined to allow VAT input claims. The company said that the petition was wrong since the debt was genuinely disputed.
Held: The . .
Lists of cited by and citing cases may be incomplete.

Customs and Excise, Insolvency

Updated: 10 June 2022; Ref: scu.195001

Heritable Reversionary Company Ltd v Millar: HL 9 Aug 1892

Where the bankrupt had been the trustee of property, the bare legal title to that property did not form part of ‘the whole property of the debtor’ and so did not vest in the permanent trustee in bankruptcy under the section. ‘My Lords, if this House were compelled to uphold the decision under appeal, I rather think I should be inclined to doubt whether the law of bankruptcy in Scotland was in a condition altogether satisfactory.’ Confusion must be avoided between the position where ‘the owner appearing on the register is a bare trustee’ and that where the owner has simply ‘come under some contractual obligation’. Lord Watson: ‘As between [the debtor and the other person] there can, in my opinion, be no doubt that according to the law of Scotland the one, though possessed of the legal title, and being the apparent owner, is in reality a bare trustee’

Judges:

Lord Macnaughten, Lord Herschell, Lord Watson

Citations:

(1892) 19 R (HL) 43, [1892] AC 598, [1892] UKHL 2

Links:

Bailii

Statutes:

Bankruptcy (Scotland) Act 1856 102

Jurisdiction:

Scotland

Cited by:

Cited – Burnett’s Trustee v Grainger and Another HL 4-Mar-2004
A flat was sold, but before the purchasers registered the transfer, the seller was sequestrated, and his trustee registered his own interest as trustee. The buyer complained that the trustee was unjustly enriched.
Held: The Act defined the . .
Cited – Colquhouns’ Trustee v Campbell’s Trustees 1902
Law agents had failed to record two bonds and dispositions granted by the owner of a property in Glasgow in security of loans which their clients had made to him. They then obtained and recorded an ex facie absolute disposition of the same subjects . .
Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 10 June 2022; Ref: scu.194200

Buchler and another (as joint liquidators of Leyland DAF Limited) v Talbot and another (as joint administrative receivers of Leyland DAF Limited) and Stichting Ofasec and others: HL 4 Mar 2004

The liquidator sought to recover his expenses from assets charged under a floating charge in priority to the chargee.
Held: Barleycorn was decided in error. The liquidators costs incurred in an insolvent winding up were not to be charged against the assets subject to the floating charge: ‘The winding up of a company is a form of collective execution by all its creditors against all its available assets. The resolution or order for winding up divests the company of the beneficial interest in its assets. They become a fund which the company thereafter holds in trust to discharge its liabilities . . . But the trust only applies to the company’s property. It does not affect the proprietary interests of others.’
Lord Hoffmann discussed whether assets covered by a floating charge which had crystallised were assets of the company: ‘When a floating charge crystallises, it becomes a fixed charge attaching to all the assets of the company which fall within its terms. Thereafter the assets subject to the floating charge form a separate fund in which the debenture holder has a proprietary interest. For the purposes of paying off the secured debt, it is his fund. The company has only an equity of redemption; the right to retransfer of the assets when the debt secured by the floating charge has been paid off. It is this equity of redemption which forms part of the fund held on trust for the company’s creditors which arises upon a winding up.
Putting aside any fixed charges, the position is therefore that if a company is in both administrative receivership and liquidation, its former assets are comprised in two quite separate funds. Those which were subject to the floating charge (‘the debenture holder’s fund’) belong beneficially to the debenture holder. The company has only an equity of redemption. Those which were not subject to the floating charge (‘the company’s fund’) are held in trust for unsecured creditors. In the usual case in which the whole of the company’s assets and undertaking are subject to the floating charge, the company’s fund will consist only of the equity of redemption in the debenture holder’s fund.’

Judges:

Lord Nicholls of Birkenhead, Lord Hoffmann, Lord Millett, Lord Rodger of Earlsferry, Lord Walker of Gestingthorpe

Citations:

[2004] UKHL 9, Times 05-Mar-2004, Gazette 25-Mar-2004, [2004] 2 WLR 582, [2004] AC 298

Links:

House of Lords, Bailii

Jurisdiction:

England and Wales

Citing:

Cited – In re Regents Canal Ironworks Co 1875
Costs incurred by liquidators in realising charged assets are payable ahead of the debenture holder’s claims. As the debenture-holder is entitled to the proceeds, it is right that he should pay the cost of realisation. . .
Cited – In re David Lloyd and Co 1877
The secured claims of debenture holders are pursued, not in the winding up, but by enforcement of the debenture holders’ proprietary rights as chargees of the assets in question. A creditor is a person who ‘is to be considered as entirely outside . .
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 . .
Overruled – In re Barleycorn Enterprises Ltd; Mathias and Davies (a Firm) v Down CA 1970
The property comprised in a floating charge forms part of the assets of a company for the purposes of paying (1) costs and expenses of winding up as well as (2) preferential debts.
Phillimore LJ said: ‘Mr Wooton’s submission [for the . .
Cited – In re Calgary and Edmonton Land Co Ltd (In liquidation) 1975
Creditors in a liquidation have only a right to have the assets administered by the liquidator in accordance with the provisions of the Insolvency Act 1986. The trust applies only to the company’s property. It does not affect the proprietary . .
Cited – Ayerst (Inspector of Taxes) v C and K (Construction) Ltd HL 1976
A resolution or order for winding up of a company divests it of the beneficial interest in its assets. They become a fund which the company thereafter holds in trust to discharge its liabilities. Where a company is wound up in this country, its . .
Cited – In re Glyncorrwg Colliery Co Ltd 1926
In a receivership the costs of the receivership (including the cost of realising the property comprised in the charge) had priority to the claims of the charge holder. The preferential payments must be paid before the debenture holders ‘but not . .
Cited – In re Griffin Hotel Co Ltd ChD 1941
A company owned hotels, in Leeds and in Buxton. In 1937, it issued a debenture creating a floating charge over all its assets to secure andpound;45,000. In December 1938, an order was made in a debenture holder’s action, appointing a receiver over . .
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 Christonette International Ltd 1982
In the case of a compulsory liquidation the date on which a floating charge is crystallised was the date on which the winding up order was made and not the date on which the winding up petition was presented. . .
Appeal from – Buchler and Another v Talbot and others CA 22-Feb-2002
The company’s assets were subject to a floating charge. That had crystallised. The liquidators, after a voluntary winding up, sought to make the assets remaining after repayment of the sums secured, available to pay the costs of the winding up. The . .

Cited by:

Cited – Commissioners of Inland Revenue v The Wimbledon Football Club Limited, Ellis, Earp CA 28-May-2004
The Commissioners appealed against a refusal of their application for a revocation of the defendant’s voluntary arrangement in that it had failed to comply with section 4. They complained that the arrangement was unfair to them. It had been agreed . .
Cited – Quickson (South and West) Limited v Stephen Mark Katz, John Stephen Kelmanson (As Joint Liquidators of Buildlead Limited) ChD 25-Aug-2004
Various applications were made in the insolvency, including for removal of the liquidators and declarations that certain payments were a fraudulent preference on the creditors.
Held: No prejudice had been shown by any procedural irregularity. . .
Cited – Ultraframe (UK) Ltd v Fielding and others ChD 27-Jul-2005
The parties had engaged in a bitter 95 day trial in which allegations of forgery, theft, false accounting, blackmail and arson. A company owning patents and other rights had become insolvent, and the real concern was the destination and ownership of . .
Cited – Hill (As Trustee In Bankruptcy of Nurkowski) v Spread Trustee Company Ltd and Another CA 12-May-2006
The defendants sought relief for transactions entered into at an undervalue. The bankrupt had entered into charges and an assignment of a loan account in their favour before his bankruptcy, and the trustee had obtained an order for them to be set . .
Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 10 June 2022; Ref: scu.194125

In re William Andrew Malcolm; William Andrew Malcolm v Benedict Mackenzie, Allied Dunbar: ChD 26 Feb 2004

The bankrupt sought to protect his personal pension taken out before his bankruptcy. The bankruptcy was initiated by the Inland Revenue, and sought protection under Human Rights law.
Held: The alleged infringement of the former bankrupt’s rights had taken place before the coming into force of the Human Rights Act 1998, and he could therefore only rely on that Act if the retrospective provision of section 22(4) applied. That section would only have effect if the proceedings were instigated by a public authority. The proceedings here were begun by the trustee in bankruptcy. The bankrupt could not rely upon protection by the 1998 Act.

Judges:

The Hon Mr Justice Lloyd

Citations:

Gazette 01-Apr-2004, [2004] EWHC Ch 339

Links:

Bailii

Statutes:

Human Rights Act 1998 22(4)

Jurisdiction:

England and Wales

Cited by:

Appeal from – Malcolm v Mackenzie, Allied Dunbar Plc CA 21-Dec-2004
The bankrupt complained that having been made bankrupt, his self-employed pension was subject to attachment by his trustee, but had he been a member of a company scheme the asset would not, and that this was discriminatory.
Held: The . .
Lists of cited by and citing cases may be incomplete.

Human Rights, Financial Services, Insolvency

Updated: 10 June 2022; Ref: scu.193898

Mulkerrins v Pricewaterhousecoopers (A Firm): ChD 29 Mar 2000

Where a bankrupt wished to pursue an action held for him personally rather than his creditors.
Held: The trustee in bankruptcy held the right of action in trust for the bankrupt, but declined to sue. The bankrupt had the right to join the trustee as a co-defendant and to commence the action under his own name.

Citations:

Times 29-Mar-2000, Gazette 06-Apr-2000

Statutes:

Insolvency Act 1986 303

Jurisdiction:

England and Wales

Citing:

Appeal to – Mulkerrins v Pricewaterhousecoopers (A Firm) CA 12-Jan-2001
A trustee in bankruptcy had had vested in him the legal title to an action for damages for the loss to personal reputation and status of the bankrupt.
Held: A declaration that he had no interest in a claim for damages against a former . .

Cited by:

Appeal from – Mulkerrins v Pricewaterhousecoopers (A Firm) CA 12-Jan-2001
A trustee in bankruptcy had had vested in him the legal title to an action for damages for the loss to personal reputation and status of the bankrupt.
Held: A declaration that he had no interest in a claim for damages against a former . .
Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 10 June 2022; Ref: scu.84112

Regina (Geologistics) v Financial Services Compensation Scheme: CA 18 Dec 2003

The claimant had made a claim against an insurance company which was insolvent. The claim had been paid by the Scheme, and he now sought payment by them of the costs of the claim also.
Held: The costs were payable. The construction of the sections sought by the appellant was too narrow.

Judges:

Thorpe, Waller, Latham LJJ

Citations:

Times 15-Jan-2004, [2003] EWCA Civ 1877

Links:

Bailii

Statutes:

Policyholder (Protection) Act 1975 6(4) 6(5)

Jurisdiction:

England and Wales

Citing:

Appeal from – Geologistics Ltd, Regina (on the Application of) v Financial Services Compensation Scheme Admn 4-Mar-2003
. .

Cited by:

Appealed to – Geologistics Ltd, Regina (on the Application of) v Financial Services Compensation Scheme Admn 4-Mar-2003
. .
Lists of cited by and citing cases may be incomplete.

Insurance, Insolvency, Costs

Updated: 09 June 2022; Ref: scu.193437

Re Co-Operative Bank Plc: ChD 18 Nov 2013

Application by the Co-operative Bank Plc for an order convening a single meeting of creditors for the purpose of considering and, if thought fit, approving a scheme of arrangement to section 896 of the 2006 Act.

Judges:

Hildyard J

Citations:

[2013] EWHC 4072 (Ch)

Links:

Bailii

Statutes:

Companies Act 2006 896

Jurisdiction:

England and Wales

Company, Insolvency

Updated: 09 June 2022; Ref: scu.519221

Smith-Evans v Smailes: ChD 29 Jul 2013

Appeal against a bankruptcy order made against the claimant. She said that an individual voluntary arrangement which had, at least ostensibly, been in place since the middle of 2008, down to the events leading to the bankruptcy petition, was a nullity. Therefore, the bankruptcy order should not have been made, as the ground for the bankruptcy order was breach of the provisions of the IVA.

Judges:

Purle QC HHJ

Citations:

[2013] EWHC 3199 (Ch), [2014] BPIR 306, [2013] WLR(D) 423, [2014] 1 WLR 1548

Links:

Bailii, WLRD

Jurisdiction:

England and Wales

Insolvency

Updated: 09 June 2022; Ref: scu.517344

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 costs was not a payment of ‘expenses incurred in the winding up’ and therefore the court had no discretion to order payment of the costs out of the fund. London Metallurgical established the primacy of the court order and this had been preserved in the rules, but the rules did not include provision for payment of costs to be paid by the liquidators under a court order.

Judges:

Laddie J

Citations:

Times 29-Dec-2003, Gazette 29-Jan-2004, [2003] EWHC 2895 (Ch), [2004] 1 All ER 577, [2004] 1 WLR 1678

Links:

Bailii

Statutes:

Insolvency Act 1986 112 156, Insolvency Rules 1986 (SI 1986 No 1925) 4.218(1) 4.220(1)

Jurisdiction:

England and Wales

Citing:

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 – 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.

Insolvency, Costs

Updated: 08 June 2022; Ref: scu.190087

Re Gunsbourg: CA 1920

The debtor transferred his assets to a company formed by him. He later committed an act of bankruptcy on which he was adjudicated bankrupt. The company had sold some of the assets to a bona fide purchaser without notice of the act of bankruptcy. The trustee impugned the transfer to the company which was held to be fraudulent and void and to constitute an act of bankruptcy, and then sought to recover from the purchaser the assets which he had acquired from the company.
Held: The trustee’s title related back to the earlier act of bankruptcy which consisted of the transfer to the company and neither the company nor any subsequent purchaser could establish any title as against the trustee. ‘If this [Lord Esher’s statement in re Pollitt] is correct the position is exactly the same as if the bankrupt had been in possession of goods belonging to another person, to which he had no title, and had sold them to the original transferee who had then resold them. In such a case neither the original nor any of the subsequent transferees would take any title at all, and the true owner could recover the goods from anyone in whose possession he found them. I know of no doctrine of law or equity which would relieve any of the transferees in these circumstances. It was however argued that this statement of Lord Esher cannot be taken to its full extent and that it must be confined to avoiding dealings with his property by the bankrupt himself after the date of relation back. This was founded on the argument that the original transfer was not void but only voidable, and that therefore any bona-fide purchase from the original transferee was protected. I am not sure that void and voidable are quite apt expressions, but clearly the transfer was not void at the moment it was made, for it might be that no circumstances would ever arise in which a trustee’s title would accrue or the bankruptcy law apply. I will assume that voidable is a correct expression to describe the nature of the transaction, and then it becomes necessary to ascertain the effect of the avoidance caused by the making of the receiving order. This seems to me to be quite different from the effect of avoidance in the ordinary case of a voidable transfer where no principles of bankruptcy law apply. In this latter case the title of the person avoiding the transaction arises only from the time when he elects to avoid, and therefore intervening bona-fide transactions are protected because the transferor up to the date of avoidance had and could confer a good title. In the case under consideration so soon as the receiving order is made the trustee at once gets a title which relates back to the earliest act of bankruptcy within three months of the receiving order, whether it be the one upon which the receiving order is made or not, and therefore his position and rights are entirely different from those of an ordinary person who elects to avoid a voidable transaction.’

Judges:

Lord Sterndale MR, Warrington LJ

Citations:

[1920] 2 KB CA

Jurisdiction:

England and Wales

Citing:

Applied – Re Pollitt CA 1893
The debtor had put his solicitor in funds to meet future costs. The solicitor then prepared a deed of assignment for the benefit of the creditors which the debtor executed. The debtor was afterwards adjudicated bankrupt, the act of bankruptcy being . .
Distinguished – Re Hart, ex parte Green 1912
The original disposal by a debtor was prior to the act of bankruptcy, though the later transfer by the disponee to the defendant was after it.
Held: In such a case, the trustee could not succeed against a transferee for value without notice. . .

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: 08 June 2022; Ref: scu.186764

In the Matter of Drax Holdings Limited and in the Matter of InPower Limited: ChD 17 Nov 2003

A company incorporated in Jersey comes within the Act for the purposes of the section. An English court has jurisdiction to wind up a foreign company if it has assets here or some other sufficient connection with this country.

Judges:

Mr Justice Lawrence Collins

Citations:

[2003] EWHC 2743 (Ch), [2004] 1 WLR 1049, [2004] 1 BCLC 10

Links:

Bailii

Statutes:

Companies Act 1985 425

Jurisdiction:

England and Wales

Citing:

Cited – In the Matter of Hawk Insurance Company Limited CA 23-Feb-2001
Arrangements for putting in place voluntary arrangements for companies. Discussing Sovereign Insurance: ‘When applying Bowen LJ’s test to the question ‘are the rights of those who are to be affected by the scheme proposed such that the scheme can be . .

Cited by:

Cited – In re Telewest Communications Plc ChD 26-Apr-2004
A scheme of arrangement had been proposed. The creditor complained that in providing for payment in a currency other than that agreed, it had been prejudiced.
Held: The provision in the scheme did purport to alter the claimant’s rights. . .
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.
Lists of cited by and citing cases may be incomplete.

Company, Insolvency

Updated: 08 June 2022; Ref: scu.188058

Geologistics Ltd, Regina (on the Application of) v Financial Services Compensation Scheme: Admn 4 Mar 2003

Citations:

[2003] EWHC 629 (Admin)

Links:

Bailii

Statutes:

Policyholder (Protection) Act 1975 6(4) 6(5)

Citing:

Appealed to – Regina (Geologistics) v Financial Services Compensation Scheme CA 18-Dec-2003
The claimant had made a claim against an insurance company which was insolvent. The claim had been paid by the Scheme, and he now sought payment by them of the costs of the claim also.
Held: The costs were payable. The construction of the . .

Cited by:

Appeal from – Regina (Geologistics) v Financial Services Compensation Scheme CA 18-Dec-2003
The claimant had made a claim against an insurance company which was insolvent. The claim had been paid by the Scheme, and he now sought payment by them of the costs of the claim also.
Held: The costs were payable. The construction of the . .
Lists of cited by and citing cases may be incomplete.

Insurance, Costs, Insolvency

Updated: 08 June 2022; Ref: scu.185577

Official Receiver v Wadge Rapps and Hunt (a firm) and another and two other actions: HL 31 Jul 2003

(Orse In re Pantmaenog Timber Co Ltd)
The Receiver sought to use information obtained under section 236 (documents recovered from the directors’ solicitors) in disqualification proceedings.
Held: The appeal succeeded. The Act had explicitly given the requisite powers to the receiver whether or not he was the liquidator. Nor was the purpose of the use restricted. The task of the receiver was not just to collect and get in the assets of the company, but also to carry out the other acts expected of him. Section 236 extended the meaning of ‘office-holder’ in this context to the Official Receiver, who was duty bound to investigate and report. His functions in a winding up were not limited to the collection and redistribution of the assets, but included investigation of its officers for the purpose of the public good of testing their conduct. The two Acts were intended to work together. The need to protect the public justified a wider reading of the statutes if necessary.
The section was constructed on the basis that such applications would be better made by the Official Receiver than the Secretary of State, because of his close knowledge of the company’s affairs. The power was not restricted by the grant of similar but more limited powers under the Disqualification Act. A restriction of the kind sought would severely limit the powers in insolvency properly to investigate the company’s actions.

Judges:

Lord Steyn, Lord Hoffmann, Lord Hope of Craighead, Lord Millett, Lord Walker of Gestingthorpe

Citations:

[2003] UKHL 49, [2003] BCC 659, [2003] 2 BCLC 257, [2003] 4 All ER 18, [2004] 1 AC 158, [2004] BPIR 139, [2003] 3 WLR 767

Links:

Bailii, House of Lords

Statutes:

Insolvency Act 1986 236, Company Directors Disqualification Act 1986

Jurisdiction:

England and Wales

Citing:

Appeal from – In re Pantmaenog Timber Co Ltd CA 25-Jul-2001
The Official Receiver could not use the powers given to him for the purposes of his insolvency duties to require production of documents form solicitors and accountants, to satisfy duties placed on him by the Secretary of State for the purpose of . .
Cited – In re Polly Peck International plc, Ex parte the joint administrators ChD 1994
The purposes of a liquidation, or administration or receivership of a company must include the gathering of information as to the conduct of the affairs of the company, and those who had conducted them so that the office-holder can report to the . .
Cited – Bishopsgate Investment Management Ltd (in Liquidation) v Maxwell CA 16-Feb-1993
The fundamental wrong in the directors’ acts lay in the signing of transfers of the company’s assets and not entirely in their failure properly to enquire as to the nature of other transaction. The breach of fiduciary duty lay in positive acts. . .
Cited – In re Paget CA 1927
The purpose of the public examination of a debtor is not merely to obtain a full and complete disclosure of his assets and the facts relating to the bankruptcy in the interests of the creditors, but also to protect the public: ‘To concentrate . .
Cited – In re London and Globe Finance Corporation Ltd ChD 1903
A company which had gone from voluntary winding up, first to winding up under supervision and then to compulsory winding up, with the official receiver as liquidator. The company’s former managing director was suspected of fraud, but the law . .
Cited – In re Jeffrey S Levitt Ltd ChD 1992
The provisions of the two Acts are intended to be part of the same statutory scheme and are to be read in combination. . .
Cited – In re John Tweddle and Company Ltd CA 1910
The court discussed the official receiver’s enquiries and report leading up to the public examination of former directors. Farwell LJ said: ‘Now those are functions of a judicial character which are cast upon him, not in the liquidation of the . .
Cited – Bishopsgate Investment Limited v Maxwell CA 1999
A person required to answer questions under the section may not refuse to answer on the ground of self-incrimination. (Dillon LJ) ‘It is plain to my mind – and not least from the Cork Report – that part of the mischief in the old law before the . .
Cited – Re North Australian Territory Co 1890
The powers given under the sections should not be used oppressively. . .
Cited – In re British and Commonwealth Holdings plc (Nos 1 and 2) HL 1993
Section 236 extended the power of a liquidator to require from the company’s officers all the documents he would reasonably need in order to fulfil his duties under the Act.
Lord Slynn said: ‘The protection for the person called upon to produce . .
Lists of cited by and citing cases may be incomplete.

Insolvency, Company

Updated: 07 June 2022; Ref: scu.185421

Grady v HM Prison Service: CA 11 Apr 2003

The applicant appealed striking out of her employment claims against the respondent. She had been made bankrupt after lodging her appeal to the EAT, and the EAT had held that she lacked standing to pursue her claim.
Held: Employment claims are in their essential nature personal and not proprietary, and did not vest in the trustee in bankruptcy. A claim for re-instatement or re-engagement and some of the compensation awards were not capable of being things in action, though the eventual fund created in any award might be. There is ‘no bright line’ between personal rights of action and those which form part of a bankrupt’s estate, but that all the reasoning in the authorities ‘tends to place on the non-vesting side of the line a claim which is primarily directed at the restoration of a contractual relationship in which the claimant’s skill and labour are the essential commodity’.

Judges:

Thorpe, Sedley LJJ, Richards J

Citations:

[2003] EWCA Civ 527, Times 18-Apr-2003, [2003] 3 All ER 745

Links:

Bailii

Statutes:

Employment Rights Act 1996 112 113 114 115 116 117

Jurisdiction:

England and Wales

Cited by:

Cited – Mulkerrins v Pricewaterhouse Coopers HL 31-Jul-2003
The claimant sought damages from her former accountants for failing to protect her from bankruptcy. The receiver had unnecessarily caused great difficulties in making their claim that such an action vested in them. The defendants had subsequently, . .
Cited – Sukui-Lennard v Croydon Primary Healthcare Trust CA 22-Jul-2003
The appellant sought to appeal a striking out of her complaint of race discrimination. She appealed from the Employment Appeal Tribunal which had rejected her appeal in its preliminary hearing procedure.
Held: The Court of Appeal had the power . .
Cited – Lambe v 186K Ltd CA 29-Jul-2004
The claimant had been dismissed for redundancy, but the company had been found not to have consulted him properly, and he had therefore been unfairly dismissed. The tribunal had then found that even if consulted the result would not have been . .
Lists of cited by and citing cases may be incomplete.

Employment, Insolvency

Updated: 07 June 2022; Ref: scu.180740

Edwards, Drummond Smith v Flightline Limited: CA 5 Feb 2003

The applicant company obtained an injunction against another company. That freezing injunction was discharged upon the payment of a sum into the names of the respective parties’ solicitors. The company went into liquidation, and the claimant disputed ownership of the sum with the provisional liquidators.
Held: The deposit of the sum was insufficient to create a charge giving any priority for the claimant over the liquidators. An equitable charge could be created only if there had been not only a restriction on any disposal, but also an obligation to pay the debt out of the fund. The consent order under which the freezing order had been discharged could not be construed to create such an obligation.

Judges:

Lord Justice Laws, Lord Justice Ward, Lord Justice Jonathon Parker

Citations:

Times 13-Feb-2003, [2003] EWCA Civ 63, Gazette 03-Apr-2003, [2003] 1 WLR 1200, [2003] 3 All ER 1200

Links:

Bailii

Statutes:

Insolvency Act 1986 130(2)

Jurisdiction:

England and Wales

Citing:

Appeal from – Flightline Ltd v Edwards and Another ChD 2-Aug-2002
Money had been paid into an account in the joint names of the parties’ solicitors in order to purchase the release of the applicants from an asset freezing order. The respondent company was in liquidation. It was argued that the payment of funds . .
Cited – Palmer v Carey PC 1926
A lender financed a trader in goods, on the basis the proceeds of sale of the goods be paid into an account in the name of the lender, and that the lender recoup himself on a monthly basis in respect of sums advanced, with the balance being released . .
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 by:

Appealed to – Flightline Ltd v Edwards and Another ChD 2-Aug-2002
Money had been paid into an account in the joint names of the parties’ solicitors in order to purchase the release of the applicants from an asset freezing order. The respondent company was in liquidation. It was argued that the payment of funds . .
Cited – Kastner v Jason, Sherman, Sherman and Sherman, Sherman and Kastner ChD 23-Mar-2004
The parties had a dispute arbitrated by the Beth Din, who ordered the sale of a property. In apparent breach of that order the owner purported to sell the property. The claimant had registered a caution which the defendants now sought to be vacated. . .
Cited – Ernst Kastner v Marc Jason, Davis Sherman, Brigitte Sherman CA 2-Dec-2004
The parties had agreed that their dispute should be resolved before the Jewish Beth Din according to Jewish substantive and procedural law. K was granted an interim freezing order. The defendant sold the asset, and K sought to assert a charge.
Cited – Withers Llp v Rybak and Others ChD 9-May-2011
The claimant solicitors sought a declaration as to whether they had a right to assert a solicitor’s common law lien over sums in its client account. The defendant clients had asserted a security interest in the money and had assigned that interest, . .
Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 07 June 2022; Ref: scu.179016

Household Mortgage Corporation plc v Whitehead and Another: CA 14 Nov 2002

The mortgage lender had proved in the voluntary arrangement as an unsecured creditor. It had valued the security as less than the debt, and accepted a dividend on the portion remaining unsecured. It now sought to enforce the security. It was argued that it had compromised its entire claim.
Held: The lender had compromised its claim for that part of the debt which was unsecured, but that did not affect its ability to claim the rest under the security. The rules made provision for this, for bankruptcy but did not apply directly to a voluntary arrangement. However the court should be slow to create different conditions for arrangements. Absent an express term in an IVA, the court should be slow to imply a term that, by participating in and accepting payment of a dividend, a secured creditor had agreed to treat part of his debt as unsecured.

Judges:

Chadwick, Sedley, Scott-Baker LJJ

Citations:

Times 29-Nov-2002, Gazette 30-Jan-2003, [2002] EWCA Civ 1657, [2003] 1 WLR 1173, [2003] 2 FCR 369, [2003] 1 All ER 319, [2003] 6 BPIR 1482, [2003] 1 All ER (Comm) 263

Links:

Bailii

Statutes:

Insolvency Rules 1986 (1986 No 1925) Part 6 Chapter 9

Jurisdiction:

England and Wales

Citing:

Application for leave – Whitehead and Another v Household Mortgage Corporation Plc CA 27-May-2002
Renewed application for leave to appeal. . .

Cited by:

Cited – Webb v Macdonald and Another ChD 29-Jan-2010
Defendant barrister and solicitors applied to have the claims against them for professional negligence struck out. They had advised on a settlement of a dispute, which settlement the claimant now said was negligently wrong.
Held: The advice . .
Lists of cited by and citing cases may be incomplete.

Insolvency, Banking

Updated: 06 June 2022; Ref: scu.178269

Shierson and Another v Rastogi and Another: CA 9 Nov 2002

Company directors in an insolvent liquidation faced proceedings by the liquidators. They resisted providing additional evidence under examination by the liquidators.
Held: The sections under the 1986 Act should be read together. Where a director faced serious charges, requiring him to provide evidence against himself would be oppressive. The existence of such proceedings must be a major factor in deciding whether to order examination, and so also was the fact that they were directors. Even so, it was a balancing exercise for each case.

Judges:

Peter Gibson, Mance, Hale LJJ

Citations:

Times 20-Nov-2002, Gazette 16-Jan-2003, [2002] EWCA Civ 1624

Links:

Bailii

Statutes:

Insolvency Act 1986 235 236

Jurisdiction:

England and Wales

Company, Insolvency

Updated: 06 June 2022; Ref: scu.178246

Official Receiver v Mckay: CA 16 Jun 2009

The defendant had incurred substantial costs failing to defend her challenge to the assessment of damages after a minor road accident. After non-payment, she was made bankrupt, and the trustee had refused her discharge from bankruptcy for her refusal to co-operate. When the original cerditor withdrew her claim for costs, the bankruptcy was annulled. The bankrupt objected to the annullment.

Judges:

Mummery, Lloyd LJJ, Sir Paul Kennedy

Citations:

[2009] EWCA Civ 467, [2009] BPIR 1061, [2010] 2 WLR 891, [2010] 1 Ch 303

Links:

Bailii

Jurisdiction:

England and Wales

Insolvency

Updated: 06 June 2022; Ref: scu.346910

Stocznia Gdanska Sa v Latvian Shipping Company and others: CA 23 Jul 2002

Application for leave to appeal to the House of Lords refused.

Judges:

Aldous, Tuckey, RixLJJ

Citations:

[2002] EWCA Civ 1089, [2002] 2 Lloyd’s Rep 436, [2002] 2 All ER (Comm) 768

Links:

Bailii

Jurisdiction:

England and Wales

Citing:

Cited – Latvian Shipping Company and Others v Stocznia Gdanska Sa CA 21-Jun-2002
A payment condition was just that and that a failure to pay entitled the seller to terminate at common law. Rix LJ said: ‘It is established law that, where one party to a contract has repudiated it, the other may validly accept that repudiation by . .
See Also – Stocznia Gdanska SA v Latreefers Inc; In re Latrefeers Inc; Stocznia Gdanska SA v Latvian Shipping Co and others (No 2) CA 15-Mar-2000
Possible claims against a foreign company for misfeasance, or wrongful or fraudulent trading might be sufficient to justify proceedings here to wind up a foreign registered company. A second requirement is that some person within this jurisdiction . .

Cited by:

See Also – Latvian Shipping Company and Others v Stocznia Gdanska Sa CA 21-Jun-2002
A payment condition was just that and that a failure to pay entitled the seller to terminate at common law. Rix LJ said: ‘It is established law that, where one party to a contract has repudiated it, the other may validly accept that repudiation by . .
Cited – Phones 4U Ltd v EE Ltd ComC 16-Jan-2018
The parties contracted for the marketing of contracts for the marketing of the defendant’s mobile phone contracts. On the claimant entering administration, the defendant exercised a clause in their contract to terminate the contract. The claimant . .
Lists of cited by and citing cases may be incomplete.

Insolvency, Torts – Other

Updated: 06 June 2022; Ref: scu.175205

Buchler and Another v Talbot and others: CA 22 Feb 2002

The company’s assets were subject to a floating charge. That had crystallised. The liquidators, after a voluntary winding up, sought to make the assets remaining after repayment of the sums secured, available to pay the costs of the winding up. The trustees of the debenture sought to appeal a finding that the assets were so available.
Held: Having come within section 40, it would later fall within section 175(2)(b) upon insolvency. If they had not been paid by the receiver for his purposes they were available to pay the liquidators costs.

Citations:

Gazette 25-Apr-2002, [2002] EWCA Civ 228

Links:

Bailii

Statutes:

Insolvency Act 1986 40 175(2(b) 251

Jurisdiction:

England and Wales

Cited by:

Appeal from – Buchler and another (as joint liquidators of Leyland DAF Limited) v Talbot and another (as joint administrative receivers of Leyland DAF Limited) and Stichting Ofasec and others HL 4-Mar-2004
The liquidator sought to recover his expenses from assets charged under a floating charge in priority to the chargee.
Held: Barleycorn was decided in error. The liquidators costs incurred in an insolvent winding up were not to be charged . .
Lists of cited by and citing cases may be incomplete.

Insolvency, Company

Updated: 05 June 2022; Ref: scu.167954

Dooneen Ltd (T/A Mcginness Associates) and Anor v Mond: SC 31 Oct 2018

This appeal concerns a situation in which, after the debtor’s estate so far as known had been distributed in partial payment of his debts, and he and his trustee had received their discharges, additional property was discovered, of which his trustee had not previously been aware. There is no suggestion that it had been concealed, or that the debtor was even aware of its existence. The question raised in the appeal is whether the trustee (or former trustee, depending on the view one takes) is entitled to the property, and can distribute it among the creditors (or former creditors) in further payment of the debts (or former debts).

Judges:

Lord Reed, Deputy President

Lord Kerr

Lord Hodge

Lady Black, Lord Briggs

Citations:

[2018] UKSC 54

Links:

Bailii, Bailii Summary

Jurisdiction:

Scotland

Insolvency

Updated: 05 June 2022; Ref: scu.628163

Comite D’Entreprise De Nortel Networks And Others v Cosme Rogeau: ECJ 11 Jun 2015

ECJ Judgment – Reference for a preliminary ruling – Regulation (EC) No 1346/2000 – Articles 2(g), 3(2) and 27 – Regulation (EC) No 44/2001 – Judicial cooperation in civil matters – Main insolvency proceedings – Secondary insolvency proceedings – Conflict of jurisdiction – Exclusive or concurrent jurisdiction – Determination of the applicable law – Determination of the debtor’s assets falling within the secondary insolvency proceedings – Determination of the location of those assets – Assets situated in a third State

Judges:

A. Tizzano, P

Citations:

C-649/13, [2015] EUECJ C-649/13, ECLI:EU:C:2015:384, [2015] WLR(D) 249

Links:

Bailii, WLRD

Statutes:

Regulation (EC) No 1346/2000, Regulation (EC) No 44/2001

Jurisdiction:

European

European, Insolvency

Updated: 05 June 2022; Ref: scu.548115

W T Lamb and Sons v Rider: CA 1948

The judge at first instance had rescinded the master’s order giving leave to the judgment creditor to proceed to levy execution although six years had passed since the judgment. On appeal the judgment creditor challenged the validity of the rule of court dating from 1883 requiring leave to proceed to levy execution. It was contended that the rule was in conflict with s2(4). It subjected the right of execution, if not exercised within 6 years, to the discretion of the court. The judgment creditor argued that it was entitled by statute to bring an action upon the judgment and to issue execution, which was ‘a proceeding in a court of law’ and therefore an ‘action upon a judgment.’ Such an action could be brought, without obtaining the leave of the court, within 12 years from the date on which the judgment became enforceable.
Held: The expression ‘an action upon any judgment’ in s 2(4) of the 1939 Act was interpreted to apply only to suing for a judgment upon a judgment. It did not apply to execution of a judgment. The Court rejected the contention that the provision in the Rules of the Supreme Court (O 42 r23(a)), requiring a judgment creditor, after the elapse of 6 years from the date of the judgment, to obtain the leave of the court to levy execution, was rendered invalid by s2(4) of the 1939 Act, which allowed 12 years for bringing an action upon any judgment as of right. Scott LJ: The 12 year limitation period set in the 1939 Act dealt only with the ‘substantive right to sue for and obtain a judgment, and with that alone;’ the period did not apply to the ‘procedural machinery for enforcing a judgment when obtained.’ The broad definition of ‘action ‘ in the 1939 Act did not have the effect of merging what had formerly been the two ‘quite independent and distinct’ subjects of (a) the substantive right to sue for and obtain a judgment and (b) the procedural machinery for enforcing a judgment when obtained. It did not cover an application to the court for leave to levy execution on the judgment after the expiration of 6 years.

Judges:

Scott L

Citations:

[1948] 2 KB 331

Statutes:

Limitation Act 1939 2(4)

Jurisdiction:

England and Wales

Cited by:

Cited – Ridgeway Motors (Isleworth) Ltd v Alts Ltd CA 10-Feb-2005
The company appelaed a refusal of the judge to strike out a winding up petition. They said the petition was based upon a judgment which was now time barred. The petitioner replied that such a petition was not an action under the section.
Held: . .
Cited – Lowsley and Another v Forbes (Trading As I E Design Services) HL 29-Jul-1998
The plaintiffs, with the leave of the court, had obtained garnishee and charging orders nisi against the debtor 11 and a half years after they had obtained a consent judgment.
Held: An application by the judgment debtor to set aside the orders . .
Lists of cited by and citing cases may be incomplete.

Insolvency, Limitation

Updated: 05 June 2022; Ref: scu.223038

Regina v Clive Louden Carass: CACD 19 Dec 2001

When a defendant was accused of an offence under the section, and wished to raise a defence under sub-section 4, the duty of proof placed on him by the sub-section amounted to a duty to bring sufficient evidence to raise the defence, and the section did not transfer the burden from the prosecution.
Held: To justify a transfer of the burden of proof, it had to be shown that this was required, and a persuasive burden rather than an evidential burden was not justified. There was no sufficient threat to society which required a higher burden. The words should be read to require the defendant to adduce sufficient evidence.

Judges:

Lord Justice Waller, Mr Justice Rougier and Mr Justice Stanley Burnton

Citations:

Times 21-Jan-2002, Gazette 27-Feb-2002, [2001] EWCA Crim 2845, [2002] 1 WLR 1214, [2002] 2 Cr App R 4

Links:

Bailii

Statutes:

Insolvency Act 1986 206 (1)(a)

Jurisdiction:

England and Wales

Citing:

Cited – Regina v Director of Public Prosecutions, ex parte Kebilene and others HL 28-Oct-1999
(Orse Kebeline) The DPP’s appeal succeeded. A decision by the DPP to authorise a prosecution could not be judicially reviewed unless dishonesty, bad faith, or some other exceptional circumstance could be shown. A suggestion that the offence for . .
Cited – Regina v Lambert HL 5-Jul-2001
Restraint on Interference with Burden of Proof
The defendant had been convicted for possessing drugs found on him in a bag when he was arrested. He denied knowing of them. He was convicted having failed to prove, on a balance of probabilities, that he had not known of the drugs. The case was . .

Cited by:

Distinguished – Regina v Daniel CACD 22-Mar-2002
The defendant appealed a conviction for hiding assets from her receiver following her bankruptcy. He said that recent case law suggested that the burden of establishing the defence under section 352 was evidential only.
Held: The conviction . .
Cited – Norwood v Director of Public Prosecutions Admn 3-Jul-2003
The appellant a BNP member had displayed a large poster in his bedroom window saying ‘Islam out of Britain’. He was convicted of an aggravated attempt to cause alarm or distress. The offence was established on proof of several matters, unless the . .
Wrongly Decided – Sheldrake v Director of Public Prosecutions; Attorney General’s Reference No 4 of 2002 HL 14-Oct-2004
Appeals were brought complaining as to the apparent reversal of the burden of proof in road traffic cases and in cases under the Terrorism Acts. Was a legal or an evidential burden placed on a defendant?
Held: Lord Bingham of Cornhill said: . .
Lists of cited by and citing cases may be incomplete.

Crime, Insolvency, Evidence

Updated: 05 June 2022; Ref: scu.167393

In re A Debtor (No 66 of 1955), Ex parte The Debtor v Trustee of Waite (A Bankrupt): ChD 1956

Waite owed money and guaranteed a debt before being made bankrupt. Waite and his trustee were not for this purpose the same person. Waite had held his assets for his own benefit. The trustee paid the debt.
Held: The trustee held the assets that vested in him for the benefit of the creditors: ‘There was in fact no mutuality at the date of the receiving order in Waite’s bankruptcy and the debt on which the action was founded was not due to Waite but to his trustee.’

Judges:

Danckwerts J, Harman J

Citations:

[1956] 1 WLR 480

Jurisdiction:

England and Wales

Citing:

Appealed to – In re A Debtor (No 66 of 1955), Ex parte The Debtor v Trustee of Waite (A Bankrupt) CA 2-Jan-1956
Waite owed the debtor andpound;101 for goods sold and delivered. He was bankrupted, having previously guaranteed the debtor’s overdraft and deposited the deeds of his property as security. Waite’s trustee paid the bank andpound;133 out of the . .

Cited by:

Appeal from – In re A Debtor (No 66 of 1955), Ex parte The Debtor v Trustee of Waite (A Bankrupt) CA 2-Jan-1956
Waite owed the debtor andpound;101 for goods sold and delivered. He was bankrupted, having previously guaranteed the debtor’s overdraft and deposited the deeds of his property as security. Waite’s trustee paid the bank andpound;133 out of the . .
Cited – Secretary of State for Trade and Industry v Frid HL 13-May-2004
The company went into insolvent liquidation. The secretary of state was to make payments to employees and there were other state preferential creditors. At the same time a refund of VAT was due from the Commissioners of customs and Excise.
Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 05 June 2022; Ref: scu.196880

Kellar v BBR Graphic Engineers (Yorks) Ltd: ChD 2002

The court was asked whether the district judge had applied the right test on an application to set aside a statutory demand because the conclusions of the district judge referred to a real prospect of success, the test used in CPR 24.2, rather than the test of genuine triable issue.
Held: The debate as to whether there is a distinction between the ‘genuine triable issue’ test for cross-claims and ‘real prospect of succeeding on the claim’ (i.e. on the cross-claims) involves a sterile and largely verbal question. Roger Kaye QC noted that the Insolvency Rules did not use the test of real prospect of success, and said: ‘It seems to me therefore to have been plainly intended that what is generally thought to have been a lower threshold than is now applicable to applications and Part 24 of the Civil Procedure Rule is to continue to apply to applications to set aside a statutory demand. This is no doubt because of the serious consequences that a statutory demand which is not set aside must have. It almost invariably and inevitably leads to the presentation of a bankruptcy petition and a bankruptcy order if the statutory demand is not set aside.’

Judges:

Mr Roger Kaye QC

Citations:

[2002] BPIR 544, [2001] 1 All ER (D) 416

Jurisdiction:

England and Wales

Cited by:

Cited – Bryce Ashworth v Newnote Ltd CA 27-Jul-2007
The appellant challenged a refusal to set aside a statutory demand, in respect of his director’s loan account with the respondent company, saying the court should have accepted other accounts to set off against that debt.
Held: A statutory . .
Cited – Collier v P and M J Wright (Holdings) Ltd CA 14-Dec-2007
Agreement for payment by joint debtor not contract
The claimant appealed against refusal of an order to set aside a statutory demand. He said that he had compromised a claim by the creditors. He argued for an extension to the Rule in Pinnel’s case, so that where a debtor agrees to pay part of a . .
Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 05 June 2022; Ref: scu.258442

Morris v Banque Arab et Internationale D’Investissment SA (No 2): ChD 26 Oct 2000

For an order to be made under the section, and a contribution to the shortfall on insolvency made, it was necessary to show that the person against whom the order was sought had in some way participated in the fraudulent activity. It was not necessary to show that there had been any direct involvement in the management or carrying on of the business.

Citations:

Times 26-Oct-2000, Gazette 02-Nov-2000

Statutes:

Insolvency Act 1986 213 (2)

Jurisdiction:

England and Wales

Citing:

See Also – Morris v Banque Arab et Internationale d’Investissement ChD 2000
The parties had exchanged lists of documents but one side objected to inspection of a number of them on the ground that it would put them in breach of French law.
Held: There was discretion to be exercised. Neuberger J ordered inspection . .
Lists of cited by and citing cases may be incomplete.

Insolvency, Banking

Updated: 05 June 2022; Ref: scu.83853

Mirror Group Newspapers Plc v Maxwell and Others: ChD 30 May 2000

The settling of remuneration paid to a court-appointed receiver was not an assessment of costs in the Chancery Division, and the court fee normally payable for such an assessment did not apply.

Citations:

Times 30-May-2000, Gazette 08-Jun-2000

Jurisdiction:

England and Wales

Citing:

See Also – Mirror Group Newspapers Plc v Maxwell and Others (No 2) ChD 15-Jul-1997
The Court reminded insolvency practitioners of fiduciary duties to creditors when refusing application for further payment on account of costs. Ferris J considered the principles applicable to fixing the remuneration of receivers of the estate of . .
Lists of cited by and citing cases may be incomplete.

Insolvency, Costs

Updated: 05 June 2022; Ref: scu.83756

Mordant v Hallas: ChD 2 Aug 1993

A debt due which consisted of a matrimonial lump sum order is not provable in a bankruptcy.

Citations:

Gazette 02-Aug-1993

Jurisdiction:

England and Wales

Citing:

Appealed to – In re Mordant CA 1996
The court discussed the interplay of family and insolvency proceedings: ‘Since the wife is unable to prove in the husband’s bankruptcy, the position . . is that the husband’s trustee must use the andpound;385,000 in paying the trustee’s expenses . .

Cited by:

Appeal From – In re Mordant CA 1996
The court discussed the interplay of family and insolvency proceedings: ‘Since the wife is unable to prove in the husband’s bankruptcy, the position . . is that the husband’s trustee must use the andpound;385,000 in paying the trustee’s expenses . .
Lists of cited by and citing cases may be incomplete.

Insolvency, Family

Updated: 05 June 2022; Ref: scu.83826

Mirror Group Newspapers Plc v Maxwell and Others (No 2): ChD 15 Jul 1997

The Court reminded insolvency practitioners of fiduciary duties to creditors when refusing application for further payment on account of costs. Ferris J considered the principles applicable to fixing the remuneration of receivers of the estate of Robert Maxwell appointed by the court under section 37 of the 1981 Act. Their total recoveries before their remuneration and legal fees amounted to pounds 1,672,500. The total of their remuneration (pounds 744,289), legal fees (pounds 705,283) and other disbursements was pounds 1,628,572, most of which was calculated on a time basis.
Held: The figures were in his judgment ‘profoundly shocking’ and he described the result of the receivership as ‘shameful’.
Ferris J regarded the 1986 Rules and other regulations as ‘somewhat sketchy, ill-expressed and consequently liable to be misunderstood’ but ‘if the matter is approached from the standpoint of general principle . . a much firmer picture emerges’ and ‘The essential point which requires constantly to be borne in mind is that office-holders are fiduciaries charged with the duty of protecting, getting in, realising and ultimately passing on to others assets and property which belong not to themselves but to creditors or beneficiaries of one kind or another. They are appointed because of their professional skills and experience and they are expected to exercise proper commercial judgment in the carrying out of their duties. Their fundamental obligation is, however, a duty to account, both for the way in which they exercise their powers and for the property which they deal with.’
With a fiduciary duty to account it was for the office-holder who seeks remuneration at a particular level to justify his claim. Ferris J identified three consequences as following from this general equitable principle: ‘First, office-holders must expect to give full particulars in order to justify the amount of any claim for remuneration. If they seek to be remunerated upon, or partly upon, the basis of time spent in the performance of their duties they must do significantly more than list the total number of hours spent by them or other fee-earning members of their staff and multiply this total by a sum claimed to be the charging rate of the individual whose time was spent. They must explain the nature of each main task undertaken, the considerations which led them to embark upon that task and, if the task proved more difficult or expensive to perform than at first expected, to persevere in it. The time spent needs to be linked to this explanation, so that it can be seen what time was devoted to each task. The amount of detail which needs to be provided will, however, be proportionate to the case.
The charging rate claimed must also be proved by evidence; and what is relevant is not the charging rate of the particular individual but the broad average or general rate charged by persons of the relevant status and qualifications who carry out this kind of work (cf in relation to solicitors’ charges Jones v Secretary of State for Wales [1997] 2 All ER 507, [1997] 1 WLR 1008 and the cases there referred to).
Second, office-holders must keep proper records of what they have done and why they have done it. Without contemporaneous records of this kind they will be in difficulty in discharging their duty to account. While a retrospective reconstruction of what has happened may have to be looked at if there is no better source of information, it is unlikely to be as reliable as a contemporaneous record. Office-holders whose records are inadequate are liable to find that doubts are resolved against them because they are unable to fulfil their duty to account for what they have received and to justify their claim to retain part of it for themselves by way of remuneration.
Third, the test of whether office-holders have acted properly in undertaking particular tasks at a particular cost in expenses or time spent must be whether a reasonably prudent man, faced with the same circumstances in relation to his own affairs, would lay out or hazard his own money in doing what the office-holders have done. It is not sufficient, in my view, for office-holders to say that what they have done is within the scope of the duties or powers conferred upon them. They are expected to deploy commercial judgment, not to act regardless of expense. This is not to say that a transaction carried out at a high cost in relation to the benefit received, or even an expensive failure, will automatically result in the disallowance of expenses or remuneration. But it is to be expected that transactions having these characteristics will be subject to close scrutiny.’ Though the aim is to reward the value of the services rendered by the office-holder, this need not equate to time spent, as to which Ferris J said: ‘In my judgment it is vital to recognise three things in this field. First, time spent represents a measure not of the value of the service rendered but of the cost of rendering it. Remuneration should be fixed so as to reward value, not so as to indemnify against cost. Second, time spent is only one of a number of relevant factors, the others being, as I have said, those which find expression in r 2.47 and similar rules. The giving of proper weight to these factors is an essential part of the process of assessing the value, as distinct from the cost, of what has been done. Third, it follows from the first two points that, as the task is to assess value rather than cost, the tribunal which fixes remuneration needs to be supplied with full information on all the factors which I have mentioned.’
As regards controls, he regarded the Rules and other regulations as ‘somewhat sketchy, ill-expressed and consequently liable to be misunderstood’ but he took the view that ‘if the matter is approached from the standpoint of general principle . . a much firmer picture emerges’. He continued: ‘The essential point which requires constantly to be borne in mind is that office-holders are fiduciaries charged with the duty of protecting, getting in, realising and ultimately passing on to others assets and property which belong not to themselves but to creditors or beneficiaries of one kind or another. They are appointed because of their professional skills and experience and they are expected to exercise proper commercial judgment in the carrying out of their duties. Their fundamental obligation is, however, a duty to account, both for the way in which they exercise their powers and for the property which they deal with.’
It is a feature of the fiduciary duty to account that it is for the office-holder who seeks remuneration at a particular level to justify his claim. Ferris J identified three consequences as following from this general equitable principle: ‘First, office-holders must expect to give full particulars in order to justify the amount of any claim for remuneration. If they seek to be remunerated upon, or partly upon, the basis of time spent in the performance of their duties they must do significantly more than list the total number of hours spent by them or other fee-earning members of their staff and multiply this total by a sum claimed to be the charging rate of the individual whose time was spent. They must explain the nature of each main task undertaken, the considerations which led them to embark upon that task and, if the task proved more difficult or expensive to perform than at first expected, to persevere in it. The time spent needs to be linked to this explanation, so that it can be seen what time was devoted to each task. The amount of detail which needs to be provided will, however, be proportionate to the case.
The charging rate claimed must also be proved by evidence; and what is relevant is not the charging rate of the particular individual but the broad average or general rate charged by persons of the relevant status and qualifications who carry out this kind of work (cf in relation to solicitors’ charges Jones v Secretary of State for Wales [1997] 2 All ER 507, [1997] 1 WLR 1008 and the cases there referred to).
Second, office-holders must keep proper records of what they have done and why they have done it. Without contemporaneous records of this kind they will be in difficulty in discharging their duty to account. While a retrospective reconstruction of what has happened may have to be looked at if there is no better source of information, it is unlikely to be as reliable as a contemporaneous record. Office-holders whose records are inadequate are liable to find that doubts are resolved against them because they are unable to fulfil their duty to account for what they have received and to justify their claim to retain part of it for themselves by way of remuneration.
Third, the test of whether office-holders have acted properly in undertaking particular tasks at a particular cost in expenses or time spent must be whether a reasonably prudent man, faced with the same circumstances in relation to his own affairs, would lay out or hazard his own money in doing what the office-holders have done. It is not sufficient, in my view, for office-holders to say that what they have done is within the scope of the duties or powers conferred upon them. They are expected to deploy commercial judgment, not to act regardless of expense. This is not to say that a transaction carried out at a high cost in relation to the benefit received, or even an expensive failure, will automatically result in the disallowance of expenses or remuneration. But it is to be expected that transactions having these characteristics will be subject to close scrutiny. ‘

Judges:

Ferris J

Citations:

Times 15-Jul-1997, [1998] 1 BCLC 638

Statutes:

Supreme Court Act 1981 37, Insolvency Rules 1986

Jurisdiction:

England and Wales

Cited by:

See Also – Mirror Group Newspapers Plc v Maxwell and Others ChD 30-May-2000
The settling of remuneration paid to a court-appointed receiver was not an assessment of costs in the Chancery Division, and the court fee normally payable for such an assessment did not apply. . .
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: 05 June 2022; Ref: scu.83755

National Westminster Bank plc v Jones and Others: CA 24 Oct 2001

The respondent farmers charged the farm by way of an agricultural floating charge to the claimants. On coming into difficulties, they set up a limited company and granted a tenancy in its favour and transferred assets to it. The bank obtained declarations that the charges remained valid and that the new tenancies and assignments should be set aside. The tenants appealed, but failed. The admitted purpose of the transactions was to put the assets beyond the reach of the bank, and that they were at an undervalue. The Agricultural Credits Act operated therefore to crystallise the charge. As to s423, it: ‘requires a comparison to be made between two figures. For that purpose the court must arrive at a conclusion based on actual values. The evidence may, of course, disclose a range of suggested figures. But the court must ascertain from the evidence the actual value against which the consideration for the transaction must be measured. That was the approach adopted by the judge. It is correct.’

Judges:

Judge LJ, Mummery LJ, Sir Martin Nourse

Citations:

Gazette 15-Nov-2001, Times 19-Nov-2001, [2001] EWCA Civ 1541, [2002] 1 BCLC 55

Links:

Bailii

Statutes:

Insolvency Act 1986 423, Agricultural Credits Act 1928 7

Jurisdiction:

England and Wales

Citing:

Appeal from – National Westminster Bank Plc v Jones and Others ChD 7-Jul-2000
A transaction could be deemed to be at an undervalue and caught by the section even though it made no difference to the overall assets and even though only one rather than the generality of creditors was prejudiced by the transaction. Here, by . .

Cited by:

Cited – Re Thoars (Dec’d); Reid v Ramlort Ltd ChD 2003
The company claimed the benefit of an insurance policy. They had paid certain premiums and the trustee had made a declaration that it was held on trust for the company. The insured died in Scotland, intestate and insolvent.
Held: The . .
Cited – Ramlort Ltd v Michael James Meston Reid CA 8-Jul-2004
The company sought to claim under a life policy. The deceased had died in Scotland insolvent. The trustee of the policy had declared that he held it on trust for the claimant, but the defendant, the judicial factor of the estate, said the . .
Cited – Feakins and Another v Department for Environment Food and Rural Affairs (Civ 1513) CA 9-Dec-2005
The department complained that the defendants had entered into a transaction with their farm at an undervalue so as to defeat its claim for recovery of sums due. The transaction used the grant of a tenancy by the first chargee.
Held: The . .
Lists of cited by and citing cases may be incomplete.

Banking, Agriculture, Insolvency

Updated: 04 June 2022; Ref: scu.166777