Nicholas John Edwards v S.J. Henderson & Company Ltd ((in Administration))
| Jurisdiction | England & Wales |
| Judge | Burton |
| Judgment Date | 10 October 2019 |
| Neutral Citation | [2019] EWHC 2742 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: CR-2019-008813 |
| Date | 10 October 2019 |
[2019] EWHC 2742 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES LIST
IN THE MATTER OF S.J. HENDERSON & COMPANY LIMITED
AND IN THE MATTER OF THE INSOLVENCY ACT 1986
Rolls Building
London, WC2A 2LL
INSOLVENCY AND COMPANIES COURT JUDGE Burton
Case No: CR-2019-008813
Case No: CR-2019-006647
And in the Matter of Triumph Furniture Limited
Rowena Page for the Applicant
Emily Gailey for the Applicant
Hearing date: 10 October 2019
Hearing date: 11 October 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.
INSOLVENCY AND COMPANIES COURT JUDGE Burton
I am asked to consider two applications, each brought urgently before the Court, as a result of concerns on the part of the administrators of each respondent company regarding the validity of their appointment. The first application concerns S.J. Henderson & Company Limited where Ms Rowena Page of counsel appeared before me on 10 October 2019. The following day, Ms Gailey appeared in the ICC Urgent Interim Applications List on behalf of the joint administrators of Triumph Furniture Limited.
Both applications concern the correct interpretation of paragraph 8.1 of the Insolvency Practice Direction (which was introduced with effect from 4 July 2018) (“IPD”) in particular, whether it should be interpreted to preclude a company or its directors from filing notices of appointment of administrators, outside of the court's usual counter-opening hours, by using the court's 24-hour e-filing system.
S.J. Henderson & Company Limited
By their application, Mr Edwards and Mr Bushby seek:
i) a declaration that the First Applicant and Duncan Robert Beat, both then of RSM Restructuring Advisory LLP (“Original Joint Administrators”) were validly appointed as administrators of S.J. Henderson & Company Limited (“SJH”) on 1 November 2018; alternatively
ii) a declaration pursuant to paragraph 104 of Schedule B1 to the Insolvency Act 1986 (“Act”) that all acts of the Original Joint Administrators and of the Applicants since 1 November 2018 have been validly undertaken notwithstanding any defect or irregularity in their appointment and an order waiving any defect or irregularity in their appointment pursuant to Rule 12.64 of the Insolvency (England and Wales) Rules 2016 (“2016 Rules”); and
iii) in the further alternative, a retrospective extension of time pursuant to rule 3.10 of the CPR for filing the notice of appointment of administrators.
Finally, they seek, in so far as there is found to be any irregularity or procedural error in the administrators' appointment, for the Court to grant appropriate relief to validate the actions taken to date.
S.J. Henderson – Background
SJH operated in the building and construction industry. From mid-2017 it experienced financial difficulty, resulting, on 3 October 2018, in its directors passing a resolution to appoint administrators of the company and authorising any director of the company to sign any documents required to place SJH into administration.
On the same date, pursuant to the provisions of paragraph 26 of Schedule B1 to the Act, Thomas James Henderson, one of the company's directors, made a statutory declaration on a notice of intention to appoint an administrator (“First NoIA”). The First NoIA was addressed to National Westminster Bank plc as a person who was or may have been entitled to appoint an administrative receiver or administrator of SJH under paragraph 14 of Schedule B1 to the Act.
Paragraph 27 of Schedule B1 provides that a person who gives notice of an intention to appoint an administrator under paragraph 26 shall, as soon as reasonably practicable, file with the court, a copy of the notice and any document accompanying it. Rule 3.23(1) sets out the information which a notice of intention to appoint administrators must contain and Rule 3.23(2) prescribes that where the company's directors intend to make the appointment, the notice must be accompanied by a copy of the decision of the directors.
On 4 October 2018, a copy of the First NoIA was e-filed at court. At 8.18am on the same date, an e-filing submission confirmation form was generated which stated that the notice was submitted at 8.18am.
The effect of Paragraph 44(4) of Schedule B1 is to create, from the time when a copy of the notice of intention to appoint an administrator is filed with the court, a moratorium preventing the steps set out in paragraphs 42 and 43 from being taken against the company or its assets without the permission of the court. The moratorium remains in place until the appointment of the administrator takes effect or the period specified in paragraph 28(2) expires without an administrator having been appointed.
Paragraph 28(2) of Schedule B1 provides that an appointment of administrators by the company or its directors may not be made after the period of ten business days, beginning with the date on which the notice of intention to appoint is filed with the court under paragraph 27(1).
Following the e-filing of the First NoIA on 4 October, the tenth such business day was Wednesday 17 October 2018. By then, SJH had not yet completed its stated intention to appoint an administrator.
On 18 October 2018 the directors e-filed a further notice of intention to appoint an administrator with the court (“Second NoIA”) supported by a copy of minutes of a further meeting of the directors of the company. The meeting is stated to have taken place on 17 October 2018 and the minutes record that the directors again resolved to appoint the Applicants as joint administrators of SJH.
The Second NoIA was addressed to the same bank and an e-filing submission confirmation was generated, stating that it had been submitted at 7.35am on 18 October 2018.
Pursuant to paragraph 28(2) of Schedule B1, the tenth business day (beginning with the date on which the notice of intention to appoint was filed with the court), after which an appointment of administrators may not be made, was 31 October 2018.
Paragraph 29 of Schedule B1 provides:
“(1) A person who appoints an administrator of a company under paragraph 22 shall file with the court—
(a) a notice of appointment, and
(b) such other documents as may be prescribed.
(2) The notice of appointment must include a statutory declaration by or on behalf of the person who makes the appointment—
(a) that the person is entitled to make an appointment under paragraph 22,
(b) that the appointment is in accordance with this Schedule, and
(c) that, so far as the person making the statement is able to ascertain, the statements made and information given in the statutory declaration filed with the notice of intention to appoint remain accurate.
(3) The notice of appointment must identify the administrator and must be accompanied by a statement by the administrator
(a) that he consents to the appointment,
(b) that in his opinion the purpose of administration is reasonably likely to be achieved, and
(c) giving such other information and opinions as may be prescribed.
(4) For the purpose of a statement under sub-paragraph (3) an administrator may rely on information supplied by directors of the company (unless he has reason to doubt its accuracy).
(5) The notice of appointment and any document accompanying it must be in the prescribed form.
(6) A statutory declaration under sub-paragraph (2) must be made during the prescribed period.
(7) A person commits an offence if in a statutory declaration under sub-paragraph (2) he makes a statement
(a) which is false, and
(b) which he does not reasonably believe to be true”.
On 31 October 2018, Thomas James Henderson made a statutory declaration on a Notice of Appointment of Administrators (“NoA”). Paragraph 1 of the NoA stated:
“The directors of the company (the appointer) has appointed the following named persons as administrators of the company: Nicholas John Edwards and Duncan Robert Beat both of RSM Restructuring Advisory LLP and notice that this appointment has been made is hereby given.”
Paragraph 8 of the NoA stated:
“The administrators' appointment was made on 31 October 2018 at 14:00”.
On 1 November 2018 at 6.03am, the directors e-filed the NoA appointing the Original Joint Administrators. On the second page of the NoA, is a box stating:
“Endorsement to be completed by the court. This notice was filed 1 st November 2018 at 6.03am”.
An e-filing submission confirmation was also generated by CE-file stating that the NoA was submitted at 6.03am.
At 9.44am on 1 November an e-filing service email was sent to the Applicant's solicitors stating:
“This is a notice to inform you that the filings listed in CR-2018-00813 (Matter No. [ reference]) have been accepted by the Clerk on 01-11-2018 09:42 AM”.
Paragraph 31 of Schedule B1 states that the appointment of an administrator under paragraph 22 takes effect when the requirements of paragraph 29 are satisfied.
On 21 January 2019, the Original Joint Administrators' proposals were accepted by creditors.
On 28 May 2019, they circulated their first progress report to creditors.
On 19 June 2019, pursuant to a block transfer order, Mr Beat, one of the Original Joint...
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