Hsbc Bank v Tambrook Jersey Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Mann |
| Judgment Date | 12 April 2013 |
| Neutral Citation | [2013] EWHC 866 (Ch) |
| Docket Number | Case No: 2281/2013 |
| Date | 12 April 2013 |
| Court | Chancery Division |
[2013] EWHC 866 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Mann
Case No: 2281/2013
Stephen Robins (instructed by CMS Cameron McKenna) for the Applicant
Hearing dates: 9 th April 2013
This is an application seeking the appointment of administrators over Tambrook Jersey Ltd ("Tambrook") made by secured creditors. It is made pursuant to a letter of request issued by the Royal Court of Jersey dated 28 th February 2013, which is said to amount to a request for assistance within section 426(4) of the Insolvency Act 1986. It presents the relatively unusual feature that there are no existing insolvency proceeding in Jersey, and apparently no intention to commence any. That raises the question of whether what is being proposed falls within the verb "assist" in section 426(4). This is a significant point of principle, and a forthcoming intended sale of assets makes delivery of this judgment urgent.
The background can be shortly stated. Tambrook is a Jersey-registered company. Its centre of main interests is in Jersey (or at least the contrary is not contended for on this application). Its main business activity, however, is in England. It has borrowed a sum exceeding £6m from HSBC Bank plc, which it has apparently spent in buying, and starting the development of, certain properties in Margate. To say that the development has not been a success is something of an understatement, because the properties (which are Tambrook's principal asset) are thought to be worth no more than £150,000, and conceivably rather less. The bank is Tambrook's main creditor, though there are other creditors in England. The bank debt is now well over £8m. It has debentures and fixed charges over Tambrook's property.
The sole director of Tambrook and the bank have provisionally arranged sale of the properties, and they acknowledge that a form of insolvency procedure is desirable before that sale takes place. However, it is not considered that any available form of Jersey insolvency proceedings would be appropriate. The only suggested candidate is a procedure known as "Désastre". This is not thought to be a satisfactory procedure in the present circumstances. It would bring to an end certain contracts which need to remain in place, or be assigned or novated. Furthermore, if it is entered into, the appointment of the Viscount to supervise the procedure (which is what would happen in Jersey) would lead to problems. If he sought recognition in England that would give rise to conflicts between Jersey law, which bests all the company's property in him, and English law, which does not. No moratorium would be available in Désastre. All in all, that procedure is sufficiently unattractive that no one proposes it, and apparently there is no intention to bring it about.
An English administration, however, is thought to be highly desirable. I do not need to set out the consequences of an administration order; suffice it to say that it would achieve the objectives of the sole director and of the bank. The bank wishes to have the properties sold so that it can recover whatever meagre sums can be made available to it under its security. A form of sale has been negotiated, and if adopted by the proposed administrators it might yield £15,000 to the bank. That, it is said, is better than nothing. In any event, the bank and the company consider that, if achievable, an English administration is the way forward.
Because the company's centre of main interests is not England, an application for the appointment of administrators cannot be made by what might be thought to be the conventional route. Instead, the parties have sought to approach the matter through section 426. They have applied for, and obtained, a letter of request from the Royal Court of Jersey. The letter records that an application was made by the bank and that the Royal Court is a court exercising insolvency jurisdiction in Jersey. Certain background matters relating to the company are then set out and the letter records that the evidence has demonstrated to the satisfaction of the 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."
Then the letter goes on:
"(6) This Court hereby requests that the English High Court, pursuant to the provisions of section 426 of the IA 1986 or otherwise, assist and act in aid of and be auxiliary to this court by: [appointing administrators and performing certain other ancillary acts]."
Armed with all this, Mr Stephen Robins, who appeared for the bank, seeks his administration order. He points out all the parts of the evidence which demonstrate how desirable an administration order would be, and also points out certain strong connections between the company and England. He then relies on the letter of request and section 426(4) and invites me to make an order appointing administrators. It is proposed that the administrators, provided that they agree with the potential sale which has already been lined up, will enter into that sale agreement and thereafter conduct all such activities as it may be appropriate for them, as administrators, to conduct.
Were it not for one point, I would accept that this case would be an appropriate one for the appointment of administrators. However, that one point is a jurisdictional one which cannot be ducked. As indicated at the beginning of this judgment, it turns on the meaning and effect of the word "assist" in the statute.
Sections 426(4)(5) provide for cooperation between courts exercising insolvency jurisdiction. It reads:
"426(4) [ Assistance between courts] The court 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.
[ Request under s.426(4)] 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...
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