Jacqueline Roma Gregory v A.R.G. (Mansfield) Ltd
| Jurisdiction | England & Wales |
| Judge | Davis-White |
| Judgment Date | 07 May 2020 |
| Neutral Citation | [2020] EWHC 1133 (Ch) |
| Date | 07 May 2020 |
| Docket Number | Case No: CR-2020-LDS-000028 |
| Court | Chancery Division |
In the Matter of A.R.G. (Mansfield) Limited
And in the Matter of the Insolvency Act 1986
[2020] EWHC 1133 (Ch)
HIS HONOUR JUDGE Davis-White QC
(SITTING AS A JUDGE OF THE HIGH COURT)
Case No: CR-2020-LDS-000028
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS IN LEEDS
INSOLVENCY AND COMPANIES LIST (CHD)
Leeds Combined Court Centre
1 Oxford Row, Leeds LS1 3BY
Ms Lisa Feng (instructed by Leonard Curtis Legal LLP) for the Applicants
Hearing dates: 17 April 2020
Approved Judgment
HIS HONOUR JUDGE Davis-White QC (SITTING AS A JUDGE OF THE HIGH COURT)
His Honour Judge Davis-White QC:
This is another in a long line of cases that has had to consider the effect of a defect in the appointment of administrators. The case came before me in the applications list in the Business and Property Courts in Leeds on 17 April 2020. I then made the order that I shall explain further below, in effect appointing the persons hitherto acting as administrators with retrospective effect (to the date of their original purported appointment) and, if and to the extent that their original purported appointment was only irregular and not a nullity, removing them as administrators under such appointment. Unless the context otherwise requires, references in this judgment to “appointment” are to appointment of (an) administrator(s).
The particular defect in this case is that the relevant company (the “Company”), being a company regulated by the Financial Conduct Authority (“FCA”), could only be put into administration with the consent of the FCA. The directors of the Company purportedly appointed administrators in January 2020, but the need for FCA consent was not appreciated at that time. As it happens, FCA consent (but subject to limitations) was obtained by letter from the FCA dated 5 March 2020.
The reasons that I decided to reserve judgment in this case were four-fold:
(1) The guidance given by HH Judge Hodge QC in Re M.T.B. Motors Limited [2010] EWHC 3751 (Ch), [2012] B.C.C. 601 as regards the manner of searching, what is now, the FCA Register so as to determine whether or not there is a need for FCA consent prior to the appointment of administrators appears to be being overlooked;
(2) The legal decision in the M.T.B Motors case appears to be have been overlooked such that in a case 18 months later, Re Ceart Risk Services Limited [2012] EWHC 1178 (Ch), Mr Justice Arnold (as he then was) was told that there was no authority on the point (see paragraph [12] of the Judgment). Mr Justice Arnold in the event reached a contrary conclusion to HH Judge Hodge QC. Decisions being reached on points of principle by one Judge in the High Court which are not referred to in a later case, and where the second judge reaches a different conclusion are, unfortunately, not a rare animal in this area of the law. Indeed, in a recent case, Re Skeggs Beef Limited [2019] EWHC 2607 (Ch), the M.T.B. Motors case was cited as if it were good law with no mention of Re Ceart;
(3) The two cases of M.T.B. Motors and Ceart appear to be in conflict;
(4) As remarked upon by Norris J, who has done so much to develop the jurisprudence in this area: “ This is a complex and technical area of the law containing conflicting decisions, all delivered under pressure of time and after hearing arguments on one side only” ( Re Euromaster Limited [2012] EWHC 2356 (Ch); [2012] BCC 754). Not only that, but from personal experience the “spate” of applications regarding the validity of administration appointments out of court and referred to by Norris J in Re Care Matter Partnership Limited [2011] EWHC 2543 (Ch); [2011] BCC 957 paragraph [3] continues, albeit with ebbs and flows.
Ms Feng appeared for the administrators of the Company and, in due course, for the directors also. I am grateful to her for her submissions, both written and oral.
Although I did not have the benefit of contrary argument, and would have welcomed it, I consider that it is appropriate, under the Practice Direction, to direct that this judgment may be cited even though the application was attended by one party only.
The Facts
The Company was incorporated in April 1994 and commenced trading shortly thereafter from premises at Mansfield Woodhouse, Nottinghamshire. Its main business was as general building contractors, dealing mainly with government and local authority-funded organisations. In particular, the Company carried out major and minor planned maintenance and refurbishment contracts of schools, colleges, universities and hospitals. Between about 1999 and 2012 it became an approved contractor for Belzona Polymerics Limited. However, by 2012 that company had formed its own installation operation and this had an adverse impact on the Company's turnover.
In common with other building companies, the Company's turnover and profitability was also adversely affected by other additional factors after 2008. These included the financial crash in 2008, increasing trade pressures thereafter, the issue as to the United Kingdom's departure from the European Union, and loss of customer confidence. The immediate causes of its financial crisis were the Company's involvement in a potential contract which was delayed and finally not granted to the Company and the weather in the late autumn/winter of 2019.
The directors consulted Leonard Curtis Recovery Limited (“Leonard Curtis”). The conclusion was reached that the Company was insolvent and that the appropriate course was to place it into administration.
A notice of intention to appoint administrators was filed on 7 January 2020. National Westminster Bank plc as qualifying charge holder consented to the appointment on 9 January 2020. On 10 January, a notice of appointment by the directors of Richard Pinder and Sean Williams of Leonard Curtis as administrators was lodged with the Court (the “Administrators”: this definition is for convenience and does not prejudge the validity of the appointment). At that stage, it was assumed that the appointment was valid and that relevant statutory requirements had been met.
The Administrators issued a Report to Creditors dated 27 February 2020. It confirmed and set out (among other things) (a) the Company's insolvency and that in the administrators' opinion, the administration would be likely to achieve the purpose of achieving a better result for the Company's creditors as a whole than would be likely if the Company were to be wound up (without first being in administration); (b) the steps that the Administrators had taken to date in the administration and (c) the Administrators' proposals, including an invitation for the creditors to approve the same under the decision procedure by correspondence rather than at a meeting. Under that procedure the proposals were deemed to have been approved without modification on 19 March 2020. It remains the case that it is anticipated that there will be payment of a dividend to unsecured creditors, they being the only class of creditors believed to exist.
On 3 March 2020 it was brought to the Administrators' attention that following a periodic review of the administration by an employee of Leonard Curtis, the employee had carried out a search of the FCA's financial service register. This revealed that the Company was previously an Appointed Representative, but that it had been registered on the relevant FCA register under the name “A R G (Mansfield) Limited” thus omitting the full-stops after each of the capital letters “A”, “R” and “G”.
Apparently, due diligence had been carried out both by or on behalf of Leonard Curtis and by solicitors for the Company prior to the purported appointment of the administrators. Although the precise facts are not clear in the evidence, it appears that the searches were under the Company's correct name (including the punctuation). What prompted the employee of Leonard Curtis to make a wider search in March than the previous search, which did not go so widely, is unclear.
One of the directors, who is also the company secretary, Ms Gregory, made a witness statement on behalf of all the directors. In it she explained that, when the issue of registration with the FCA was raised with her by staff from Leonard Curtis (apparently when the fact of registration was established), she could not recall why the Company would have had an appointed representative status with the FCA. After further investigation it became clear that the Company had been a member of the Federation of Master Builders which operated a trust mark guarantee scheme backed by an insurance policy. It...
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