Hartley Pensions Ltd ((in Administration)) v Wilton UK (Group) Ltd

Hearing dates: 26–27 June 2023

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.

HH JUDGE Davis-White KC (SITTING AS A JUDGE OF THE CHANCERY DIVISION)

This judgment was handed down by the Judge remotely by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand-down is deemed to be 10:30m on 7 July 2023

Judge Davis-White KC:

Introduction

On the application of Hartley Pensions Limited (in administration) (the “Applicant”), by application notice issued on 9 June 2023, I made an administration order, with retrospective effect, in relation to Wilton UK (Group) Limited (“the Company”) on 27 June 2023. At the time I gave an indication of my main reasons in brief but indicated that I would hand down my written reasons at a later date. These are my reasons. I took this course because it appeared to me important that a decision was made as soon as possible but in circumstances where time was needed to prepare a judgment setting out my full reasoning, not least given the widespread interest generated by this case.

An apparent appointment of administrators had been made out of court. Its validity was in doubt. The main issue that I had to decide was whether to (a) place the Company into administration (by way of regularising any invalidity in the original appointment) or (b) make a winding up order on a winding up petition.

As I shall go on to explain, matters may not have been quite that simple because, as regards the winding up petition, an issue as to whether the petition debts in question were disputed had not been formally resolved and it was not clear to me, for example, whether, in any event, the further hearing of the petition might need to be advertised. Furthermore, the suspension of the Petition under paragraph 40 of Schedule B1 to the Insolvency Act 1986 (“IA 1986”) could only be lifted if I made a finding that the appointment of administrators was invalid, whereas for the purposes of the administration application I was only asked to assume that it might be invalid.

Be all this as may be, within minutes of my starting to give judgment, matters changed when I was (politely) interrupted to be told that an agreement had been reached between the Petitioners who had presented the winding up petition (the “Petitioners”) and the applicant for the making of an administration order (the “Applicant”). The Petitioners withdrew their opposition to the making of an administration order as sought, whilst reserving their position as to costs. That, of itself, did not change my function. First, an administration order cannot be made by consent; the court must be satisfied that there is jurisdiction to make the order and that it is appropriate to do so. Secondly, there were a number of alleged creditors of the Company who had supported the winding up petition and who opposed the making of an administration order. A winding up petition is a class remedy. A company and a petitioner cannot of themselves by agreement among themselves necessarily prevent it from proceeding further. Other creditors might have wished to apply to be substituted as petitioners on the winding up petition and, as I understood it, those claiming to be creditors of the Company who appeared in front of me in addition to the Petitioners, apparently supporting that petition, were not parties to the “settlement” reached between the Petitioners and the Applicant.

In reality, therefore the choice before me may more accurately have been one as to an immediate administration order or continued winding up proceedings. No-one invited me to consider making an interim order under paragraph 13 of Schedule B1 to the Insolvency Act 1986. If I made an administration order then the winding up petition would fall automatically to be dismissed (see IA 1986, Schedule B1 para. 40). Ultimately, this is what happened as a result of my decision.

The Company, its business and its relationship with the Applicant

At this point it is probably helpful to explain a little more about the Company.

According to the last filed accounts for the Company, for the year ended 30 April 2020, the Company is a wholly owned subsidiary of an Isle of Man incorporated company, Wilton Group Limited. As at that date the accounts show the Company to have had 10 subsidiaries. Many have the word “Wilton” in their name. However, there were then also two “Hartley” named companies, of which the Applicant (Hartley Pension Limited) is one. The principal activity of the “group” in the year in question is described as being acting as “a holding company and as a provider of professional, financial and pension services.”

As regards the Applicant, Mr Kubik for the Applicant has given the following further details in his 4th witness statement:

“ 6. By way of background, HPL is a personal pension service provider and was incorporated in England and Wales on 4 March 2015 with company registration number 09469576, under the name Hartley Lifetime Pensions Limited. HPL is authorised and regulated by the Financial Conduct Authority (“FCA”) with FCA reference number 735936. The scope of HPL's business is providing Self-Invested Personal Pension schemes (“SIPPs”) and Small Self-Administered scheme.

7. HPL provides and operates 9 pension schemes (the “Schemes”) which govern the 16,646 SIPPs currently on HPL's books. The SIPPs are collectively registered, in accordance with the Finance Act 2004.

8. HPL entered administration on 29 July 2022 by way of an out of court appointment by the director, Michael Anthony Flanagan, made pursuant to paragraphs 22 and 29 of Schedule B1 of the IA 1986.

9. I can confirm that the current proposal for the winding down of HPL's business is for HPL to issue a claim under Part 8 of the Civil Procedure Rules within the next few months, in order to seek a declaration to impose a proposed exit and administration charge on the HPL clients, to ensure an orderly transfer out of HPL's SIPP clients to new operators.”

As regards the business relationship between the two Companies, Mr Kubik continues:

“10. The Company provides a number of services to HPL, including: information technology services, property management services and corporate legal and regulatory compliance services.

11. The Company provides access to IT servers which HPL utilises including all e-mail, domains and document management systems.

12. The Company provides property management of the SIPP property assets including:

(1). creating and sending rent demand and rent invoices due;

(2). execution of lease documents, completion of VAT folders with the information required to carry out reviews;

(3) corresponding with clients for missing documents for the records to prove HMRC compliance; and

(4). liaising with members and their advisors in relation to sales management services and execution of sales documentation.

13. The Company also provides corporate and legal services, including, filing dormant annual financial statements and preparing and filing confirmation statements and annual accounts for HPL..”

It was explained to me how dependent on the Company the Applicant is, not least in terms of the data retained and managed by the Company. The administrators of the Applicant have also confirmed to the FCA their view of the impact that an immediate cessation of trade of the Company would have on the Applicant (and its circa 16,000 clients) as a customer of the Company for its services.

In an email dated 23 June 2023, the FCA set out its position as follows:

“ As you are aware, the FCA is the regulator of Hartley Pensions Limited – In Administration (‘Hartley’). It has a statutory objective to secure an appropriate degree of protection to customers under Section 1C(1) of FSMA.

The FCA can confirm that you have informed us of an outstanding winding-up petition in relation to Wilton UK (Group) Limited (‘Wilton’), who you have described as an “essential supplier” to Hartley. You have also informed us that should Wilton no longer be able to provide services to Hartley, this will impact Hartley's ability to conduct regulated...