In re Highfield Commodities Ltd: ChD 1985

The court’s discretion in appointing provisional liquidators is unfettered provided it is exercised in a ‘proper judicial manner’. Sir Robert Megarry V-C said: ‘I would respectfully express my complete agreement with the view taken by [the judge]. I do not think that the old authorities, properly read, had the effect of laying down any rule that the power to appoint a provisional liquidator is to be restricted in the way for which Mr Burke-Gaffney contends. No doubt a provisional liquidator can properly be appointed if the company is obviously insolvent or the assets are in jeopardy; but I do not think that the cases show that in no other case can a provisional liquidator be appointed over a company’s objection . . Section238 . . is in quite general terms. I can see no hint in it that it is to be restricted to certain categories of cases. The section confers on the court a discretionary power, and that power must obviously be exercised in a proper judicial manner. The exercise of that power may have serious consequences for the company, and so a need for the exercise of the power must overtop those consequences’ . . but in the case of a public interest petition, ‘the public interest must be given full weight’.
The general practice is for an undertaking as to damages to be given upon an ex parte application for provisional liquidators, but such an undertaking would not be required on an inter partes application. A cross-undertaking as to damages might not be required where ‘The Secretary of State was seeking to enforce the law, or was acting selflessly in the performance of a public duty directly or impliedly imposed by statute . .’
Sir Robert Megarry V-C
[1985] 1 WLR 149, [1984] BCLC 623
Companies Act 1985
England and Wales
CitedDobson v Hastings 1992
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Cited by:
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These lists may be incomplete.
Updated: 19 March 2021; Ref: scu.401969