HSBC Bank Plc v Tambrook Jersey Ltd

JurisdictionEngland & Wales
JudgeLord Justice Davis,Lord Justice McFarlane,Lord Justice Longmore
Judgment Date22 May 2013
Neutral Citation[2013] EWCA Civ 576
CourtCourt of Appeal (Civil Division)
Docket NumberCase No: A3/2013/1036
Date22 May 2013

[2013] EWCA Civ 576

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

CHANCERY DIVISION, COMPANIES COURT

MR JUSTICE MANN

2281/2013

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

Lord Justice Longmore

Lord Justice McFarlane

and

Lord Justice Davis

Case No: A3/2013/1036

In the Matter of Tambrook Jersey Limited and in the Matter of the Insolvency Act 1986

HSBC Bank Plc
Appellant
and
Tambrook Jersey Limited
Respondent

Miss Felicity Toube Q.C. and Mr. Stephen Robins (instructed by CMS Cameron McKenna LLP) for the Appellant

The Respondent did not appear and was not represented.

Hearing date: 1 st May 2013

Approved Judgment

Lord Justice Davis

Introduction

1

This appeal raises a question of interpretation of s.426 of the Insolvency Act 1986 ("the 1986 Act"). It involves consideration of the circumstances in which the courts of England and Wales have jurisdiction to accede to a request for assistance from a foreign court (in this case, the Royal Court of Jersey).

2

The appeal is from a decision of Mann J contained in a judgment handed down on 12 April 2013. The judge dismissed an application made by HSBC Bank plc ("the Bank"), pursuant to a Letter of Request by the Royal Court of Jersey dated 28 February 2013, for the appointment of administrators over Tambrook Jersey Limited ("the Company"). At the conclusion of the appeal hearing, this court had reached the view that the appeal should be allowed. Since, as the court was told, there was now an element of urgency about the matter — and in fact the appeal had been expedited — the court announced that the appeal would be allowed and ordered that administrators be appointed over the Company on the terms of the draft order submitted. It was indicated that reasons thereafter would be given in writing. These are my reasons for being party to the decision to allow the appeal.

3

The Bank was represented before us by Miss Felicity Toube QC and Mr Stephen Robins. There was no appearance by the Company or any creditors.

Background facts

4

The Company was incorporated under the laws of Jersey on 29 November 2006, with its registered office at an address in St Clement, Jersey. Its sole business was to invest in and develop residential properties in England. Its authorised share capital was £10,000, with two issued shares of £1 each held by its sole director, a resident of Jersey.

5

In 2007 the Company was granted substantial borrowing facilities by the Bank to fund a development in Margate, Kent. Legal charges over various properties and other securities were granted to the Bank. The properties represented the vast majority of the Company's assets, although it also maintained a bank account in Jersey.

6

For a number of reasons the development has proved a disaster. The Bank eventually declined to provide further facilities. It made demand for repayment of its loan and outstanding interest (then totalling nearly £8.2 million) on 29 and 30 January 2013. The demands were not met. Development work has ceased.

7

The Company is hopelessly insolvent. The current valuation of the development is but a very small fraction of the Company's total indebtedness. There is a major shortfall for the Bank as secured creditor and no realistic possibility of recovery for unsecured creditors, of whom there are a number in England.

8

It is intended to sell on the development for the best price that can be obtained. It was determined that for a number of reasons (set out in the evidence and which it is not necessary to repeat here) liquidation proceedings in England or désastre proceedings in Jersey would not be advantageous either to the Company or to its creditors: whereas the appointment of administrators was assessed to confer a number of advantages.

9

It was accepted before the judge that the Company had its centre of main interests in Jersey. That being so, the English courts had no power directly to make an administration order under s.7 and Schedule B1 of the 1986 Act, by reference to EC/1346/2006. At the same time, there is no administration procedure, or any equivalent, available to the courts in Jersey. The principal insolvency remedy available to creditors of a company in Jersey is that of désastre (which broadly, although by no means entirely, corresponds to our liquidation). However, as indicated above, a désastre procedure was in this particular case, and for cause, assessed as disadvantageous.

10

It was accordingly decided by the Bank, with the agreement of the Company, to seek the assistance of the Royal Court of Jersey. That court has jurisdiction in insolvency matters in Jersey.

The proceedings in Jersey

11

On 13 February 2013 the Bank presented a Representation to the Royal Court of Jersey (Samedi Division). The Representation set out the background at length and explained why it was considered that it was in the interests of the creditors for the Company to be placed into administration in England under the provisions of the 1986 Act. It asked that a Letter of Request be issued by the Royal Court, addressed to the High Court of Justice of England and Wales, for that purpose.

12

The Royal Court gave a number of initial directions. These included giving notification of the Representation, and of the forthcoming hearing fixed to consider the Representation, to the Company and to identified creditors of the Company (most of whom were based in England). No notice of opposition to the Representation was received. The Company had itself, by prior resolution dated 1 February 2013, resolved that it was in the best interests of the Company to be placed into administration in England.

13

The Representation was considered by the Royal Court (Commissioner Clyde-Smith sitting with Jurats) on 28 February 2013. The Bank was represented by an advocate. There was also before the court, and in its judgment it referred to and relied on, a written Opinion of Miss Toube stating her opinion that under s.426(4) of the 1986 Act the High Court may assist the Royal Court and that the requirements of Schedule B1 to the 1986 Act were reasonably likely to be achieved in this case. The Royal Court also had detailed written evidence from the Company and from the Bank. The matter plainly was carefully considered. The court noted in its judgment the disadvantages of a désastre. The court concluded that it had jurisdiction to make the request, citing previous Jersey authorities for that purpose, and that it would be "appropriate and advantageous" for administrators to be appointed over the Company by the High Court. It was also noted in paragraph 10 of the judgment that the known creditors had been "convened" and none had contested the relief sought.

14

The Letter of Request was accordingly issued by the Royal Court on that day. It was addressed to the High Court of Justice, Chancery Division. In paragraph 1 it stated: "This Court [the Royal Court] is a court exercising jurisdiction relating to insolvency law in Jersey." It then noted that the Company was insolvent and had substantial connections with England. In paragraph 5 of the Letter of Request this was said:

"5. The evidence filed by the Company and the Representor has demonstrated to the satisfaction of this Court that it is just and convenient and in the interests of creditors of the Company that this request should be issued and that an administration order should be made in England in relation to the Company."

The request was then made to the effect that the High Court should hear and determine the application for an administration order and, if it thought fit, make an administration order. One direction also requested in this regard was that any such order should give creditors having priority under the Jersey désastre procedure the like priority in the English administration.

15

It was by reference to that Letter of Request that the Bank made its application for an administration order to the Chancery Division in London (the matter of course being assigned to the Companies Court). The application was issued on 25 March 2013. No opposition to the application was indicated by any person.

The Statutory Provisions and Statutory Framework

16

Section 426 of the 1986 Act is entitled "Co-operation between courts exercising jurisdiction in relation to insolvency". For present purposes, the relevant parts of that section provide as follows:

"426 Co-operation between courts exercising jurisdiction in relation to insolvency.

(1) An order made by a court in any part of the United Kingdom in the exercise of jurisdiction in relation to insolvency law shall be enforced in any other part of the United Kingdom as if it were made by a court exercising the corresponding jurisdiction in that other part.

…..

(4) The courts having jurisdiction in relation to insolvency law in any part of the United Kingdom shall assist the courts having the corresponding jurisdiction in any other part of the United Kingdom or any relevant country or territory.

(5) For the purposes of subsection (4) a request made to a court in any part of the United Kingdom by a court in any other part of the United Kingdom or in a relevant country or territory is authority for the court to which the request is made to apply, in relation to any matters specified in the request, the insolvency law which is applicable by either court in relation to comparable matters falling within its jurisdiction.

In exercising its discretion under this subsection, a court shall have regard in particular to the rules of private international law.

…..

(10) In this section "insolvency law" means—

(a) in relation to England and Wales,...

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