A liquidator applied to discharge an order that had been made against him ex parte under section 234 requiring him to hand over books and records of the company in his possession to administrative receivers.
Held: Hoffman J said: ‘It was wrong for the application to be made ex-parte. It is a basic principle of justice that an order should not be made against a party without giving him an opportunity to be heard. The only exception is when two conditions are satisfied. First that giving him such a opportunity appears likely to cause injustice to the applicant by reason either of the delay involved or the action which it appears likely that the respondent or others would take before the order can be made. Secondly when the court is satisfied that any damage which the respondent may suffer through having to comply with the order is compensatable under the cross undertaking or that the risk of un-compensatable loss is clearly outweighed by the risk of injustice to the applicant if the order is not made. There is, I think, a tendency among applicants to think that a calculation of the balance of advantage and disadvantage in accordance with the second condition is sufficient to justify an ex-parte order. This should be discouraged. One does not reach any balancing of advantage and disadvantage unless the first condition has been satisfied. The principle audi alterem partem does not yield to a mere utilitarian calculation. It can be displaced only by invoking the overriding principle of justice which enables the court to act at once when it appears likely that otherwise injustice will be caused.’
Hoffman J
[1991] BCC 782, [1992] BCLC 824
Insolvency Act 1986 234
England and Wales
Cited by:
Cited – Bagnall QC v the Official Receiver ChD 18-Jun-2003
The bankrupt was to receive his automatic discharge. The receiver had applied ex parte to suspend the automatic discharge. The bankrupt appealed.
Held: The court had power to make such an order. The court had seen strong prima facie evidence . .
Cited – Franses v Al Assad and others ChD 26-Oct-2007
The claimant had obtained a freezing order over the proceeds of sale of a property held by solicitors. The claimant was liquidator of a company, and an allegation of wrongful trading had been made against the sole director and defendant. The . .
Lists of cited by and citing cases may be incomplete.
Litigation Practice
Updated: 20 January 2022; Ref: scu.184531
