Autoquake Ltd v Car Care Plan Ltd
| Jurisdiction | England & Wales |
| Judge | THE JUDGE |
| Judgment Date | 24 February 2012 |
| Neutral Citation | [2012] EWHC 1344 (Ch) |
| Docket Number | Case No: 2011/717 |
| Court | Chancery Division |
| Date | 24 February 2012 |
[2012] EWHC 1344 (Ch)
IN THE HIGH COURT OF JUSTICE CHANCERY DIVISION
Royal Courts of Justice
Strand,
London WC2A 2LL
Miss S Asplin QC
(Sitting as a Deputy Judge of the High Court)
Case No: 2011/717
MR C BROCKMAN (Instructed by Dewey Le Boeuf) appeared on behalf of the Claimant.
Approved Judgment
Friday, 24 February 2012
This is an application by the joint administrators of Autoquake Limited, an online car retailer. The application is concerned primarily with unexpired warranties in respect of vehicles sold. The administrators seek directions as to the admission or valuation of warranty holders' claims. The application was adjourned by Mann J on 18 January 2012, as I understand it, in the hope that further information would be available. On that occasion, he decided that the funds which had been held by Car Care Plan Limited to meet warranty claims, and which had been returned to the joint administrators, had not been held on trust. He also extended the period of the administration for another year.
To be specific, the joint administrators seek directions pursuant to paragraph 63 of Schedule B1 of the Insolvency Act 1986. They ask the court to exercise its discretion to either value the warranty holders' claims at zero, or to exclude them. If the court is not minded to do so, the joint administrators, in the alternative, seek directions as to the future conduct of the administration, which may also become an insolvency. They also seek the admission of Car Care Plan Limited as an unsecured creditor in the administration so that they, Car Care Plan Limited, may participate in the distribution, if any, of the prescribed part.
In summary, it was always intended that the warranties would be self-funded. The scheme was administered by Car Care Plan Limited on behalf of Autoquake, to which it paid sums on a monthly basis in respect of claims and an administration fee. The warranty handbook which was provided to the purchaser of the vehicle provides that the warranties conform with motor industry code of practice for vehicle warranty products and that Car Care Plan ("CCP") was a subscriber to that code.
There was a contract between CCP and Autoquake, and that was terminated on 22 March 2011 by the joint administrators, precise terms having been agreed between them. As a result of that agreement, £300,000-odd was transferred back to Autoquake on 23 March 2011 and a further £11,450 on 19 April 2011. On 22 March the joint administrators had written to customers, explaining what had happened and inviting them to provide details of any claim arising under a warranty during the administration, and provided a proof of debt form. There have been 420 claims received.
It appears from the joint administrators' evidence that the unsecured creditors of Autoquake are as follows: trade and expense, £5,830,133 (being 142 creditors); HMRC, £268,677; employee claims, £938,329 (with a potential 160 claims); and the warranty claim creditors being potentially £1,683,063, of whom there are likely to be about 5,600 who have unexpired warranties. There is approximately £428,707 which is likely to be available to the unsecured creditors, so, on that basis, they are going to receive only pence in the pound. If the warranty holders are included, then it is likely to be only 0.88 pence in the pound. If they were excluded, it might be as much as 3 pence in the pound.
Initially directions were sought as to the method of valuing the claims of the warranty holders, and directions (which have since been suspended) were given to enable the warranty holders to be represented. Since then, Car Care Plan Limited have indicated that they intend to pay all warranty claims actually made up to the value of the claims fund at the date of the administration, which was £351,000-odd, and also seek to be admitted as an unsecured creditor in the sum of £40,000. They have paid, it would seem, approximately £33,125 in claims made by warranty holders in the period during the administration from March 2011, at least until the end of January 2012. All the warranties but one will have expired by March 2014. The final outstanding warranty will expire in October 2014. Although any number or claims can be made under a warranty, each such claim is limited to £1,000 plus VAT, and the total number of claims cannot exceed the value of the vehicle in question. Warranty claims paid prior to the administration amounted to £763,819.95, and that was for the period from May 2008 until the commencement of the administration in March 2011. CCP does not anticipate that the level of claims will significantly rise during the unexpired period. It also states that it does not believe that there is any reason why it will not be able to pay warranties to the aggregate value of the fund. Mr Brockman took me to the financial information, which was the audited accounts of CCP to the end of December 2010 which showed a healthy level of net assets, although it did show a loss for the year, but that was partially attributable to a one-off payment which had to be made to the pensions scheme. I am satisfied, in that respect, that CCP would be able to meet the claims up to the amount of the £351,000-odd.
CCP has written to the joint administrators by a letter of 22 February 2012 to the effect of all the details that I have just given and stated that it intends to pay up to that amount...
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