Georgina Marie Eason and Michael Colin John Sanders of Macintyre Hudson LLP, as Joint Administrators of Skeggs Beef Ltd ((in Administration)) v Skeggs Beef Ltd ((in Administration))

Hearing date: 18 September 2019

Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

INTRODUCTION

. By an application made under paragraph 63 of Schedule B1 to the Insolvency Act 1986, the Applicants, Ms Eason and Mr Sanders of MacIntyre Hudson LLP, apply for a declaration that their appointment as joint administrators of Skeggs Beef Limited (the Company) was valid and effective from 5:03pm on 10 September 2019.

. The Applicants were or purportedly were appointed as administrators by the holders of a qualifying floating charge (the Qualifying Charge Holders). In order for that appointment to be effective, proper notice of the appointment must be given to the court. Notice was given by the Qualifying Charge Holder but, for reasons that it will be necessary to explore in this Judgment, the Applicants are concerned about the validity of their appointment. Their concern arose out of the fact that the notice of their appointment was not filed in accordance with rules 3.20 and 3.21 of the Insolvency (England and Wales) Rules 2016.

. Accordingly, the Applicants applied to this Court for declarations that:

(1) Their appointment was valid and took effect at 5:03pm, on 10 September 2019; and

(2) All acts by them as joint administrators were not invalid by reason of the failure to file the notice of their appointment in accordance with rules 3.20 and 3.21.

At an oral hearing, I indicated that I would grant declarations along the lines sought by them, with my written reasons to follow. These are those reasons.

. In order to understand the Applicants' concerns about their appointment, it is necessary to consider first the provisions, as they changed over time, regarding the appointment of administrators by the holder of a qualifying floating charge and then the provisions, again as they changed over time, regarding the Electronic Working Pilot Scheme for the filing of documents.

THE PROVISIONS IN THE INSOLVENCY ACT 1986 AND THE INSOLVENCY RULES

. Schedule B1 was inserted into the Insolvency Act 1986 by section 248 of the Enterprise Act 2002 with effect from 15 September 2003. Schedule B1 introduced a wholly new administration regime.

. Also with effect from 15 September 2003, rule 5(1) and paragraph 9 of Schedule 1 to the Insolvency (Amendment) Rules 2003 introduced a new Part 2 of the Insolvency Rules 1986, which provided that the holder of a qualifying floating charge might file a notice of appointment when the court was closed by:

(1) Faxing it to the designated telephone number: see rule 2.19(1) of the Insolvency Rules 1986 (as so amended); and

(2) Attaching a statement providing full reasons for the out of hours filing, including why it would have been damaging to the company and its creditors not to have so acted: see rule 2.19(8) of the Insolvency Rules 1986 (as so amended).

. By rule 2 and paragraph 41(2) of Schedule 1 to the Insolvency (Amendment) Rules 2010, with effect from 6 April 2010, rule 2.19 of the Insolvency Rules 1986 was further amended to enable the holder of a qualifying floating charge to file a notice of appointment when the court was closed by sending it as an attachment to an email to a designated email address.

. With effect from 6 April 2017, when the Insolvency (England and Wales) Rules 2016 came into effect, rule 2.19 of the Insolvency Rules 1986 was replaced by rule 3.20 of the Insolvency (England and Wales) Rules 2016. The new rule was materially in the same terms as the rule it replaced. It provided as follows:

“(1) When (but only when) the court is closed, the holder of a qualifying floating charge may file a notice of appointment with the court by –

(a) faxing it to a designated telephone number; or

(b) emailing it, or attaching it to an email, to a designated email address.

(2) The notice must specifiy the name of the court (and hearing centre if applicable) that has jurisdiction.

(3) The Lord Chancellor must designate the telephone number and email address.

(4) The Secretary of State must publish the designated telephone number and email address on the Insolvency Service webpages and deliver notice of them to any person requesting them from the Insolvency Service.

(5) The appointer must ensure that –

(a) a fax transmission report giving the time and date of the fax transmission and the telephone number to which the notice was faxed and containing a copy of the first page (in part or in full) of the document faxed is created by the fax machine that is used to fax the notice; or

(b) a hard copy of the email is created giving the time and date of the email and the address to which it was sent.

(6) The appointer must retain the fax transmission report or hard copy of the email.

(7) The appointer must deliver a notice to the administrator of the filing of the notice of appointment as soon as reasonably practicable.

(8) The copy of the faxed or emailed notice of appointment as received by the Courts Service must be delivered by the Lord Chancellor as soon as reasonably practicable to the court specified in the notice as the court having jurisdiction in the case, to be placed on the relevant court file.

(9) The appointer must take to the court on the next occasion that the court is open for business –

(a) three copies of the faxed or emailed notice of appointment;

(b) the fax transmission report or hard copy required by paragraph (5);

(c) all supporting documents referred to in the notice in accordance with rule 3.21(1) which are in the appointer's possession; and

(d) a statement providing reasons for the out-of-hours filing of the notice of appointment, including why it would have been damaging to the company or its creditors not to have so acted.

…”

THE PROVISIONS RELATING TO THE ELECTRONIC WORKING PILOT SCHEME

. Pursuant to Practice Direction 51O on the Civil Procedure Rules ( CPR), an Electronic Working Pilot Scheme came into force on 16 November 2015 and provided for a pilot scheme to operate for one year. Paragraph 2.1 and 2.2 (so far as relevant) provided:

“2.1 Electronic Working enables parties to issue proceedings and file documents online 24 hours a day every day all year round, including during out of normal court office opening hours and on weekends and bank holidays, except where there is –

(a) planned “down-time”: as with all electronic systems, there will be some planned periods for system maintenance and upgrades when Electronic Working will not be available; and

(b) unplanned “down-time”: periods during which Electronic Working will not be available due, for example, to a system failure or power outage, or some other unplanned circumstance.

2.2 For the avoidance of doubt, Electronic Working applies to and may be used to start and/or continue…insolvency proceedings…”

. On 29 September 2016, the Practice Direction was amended – by the 86 ^th update to the CPR – to extend the Electronic Working Pilot Scheme from one year to two years: that is, until 16 September 2017.

. By the 96 ^th update to the CPR, the Electronic Working Pilot Scheme was further extended to 6 April 2018. More significantly, for present purposes, paragraph 2.1 of Practice Direction was amended to add the words underlined and delete the words struck out in the text below:

“2.1 Electronic Working enables parties to issue proceedings and file documents online 24 hours a day every day all year round, including during out of normal court office opening hours and on weekends and bank holidays, except where there is –

(a) where there is planned “down-time” planned “down-time”: as with all electronic systems, there will be some planned periods for system maintenance and upgrades when Electronic Working will not be available; and

(b) where there is unplanned “down-time” unplanned “down-time”: periods during which Electronic Working will not be available due, for example, to a system failure or power outage, or some other unplanned circumstance.; and

(c) where the filing is of a notice of appointment by a qualifying floating charge holder under Chapter 3 of Part 3 of the IR 2016 and the court is closed, in which case the filing must be in accordance with rule 3.20 of the IR 2016.”

2.2 For the avoidance of doubt, Electronic Working applies to and may be used to start and/or continue…insolvency proceedings…”

THE INTER-RELATIONSHIP BETWEEN THE INSOLVENCY RULES AND THE ELECTRONIC FILING RULES

. There are, therefore, two regimes for the electronic filing of documents. A limited, out-of-court hours regime, for the holder of a qualifying floating charge, under what is now rule 3.20 of the Insolvency (England and Wales) Rules 2016; and a much more wide-ranging regime under the CPR in Practice Direction 51O.

. Where the Insolvency Rules – as here – specify in great detail a regime for the notification of the appointment of administrators, that regime cannot be trumped or overridden by a Practice Direction in the CPR:

(1) The Insolvency (England and Wales) Rules 2016 are a statutory instrument ( SI No 1024 of 2016) and were made by the Lord...