Re Pantmaenog Timber Company Ltd (pet all)
| Jurisdiction | UK Non-devolved |
| Judge | LORD MILLETT,LORD HOPE OF CRAIGHEAD,LORD HOFFMANN,LORD WALKER OF GESTINGTHORPE,LORD STEYN |
| Judgment Date | 31 July 2003 |
| Neutral Citation | [2003] UKHL 49 |
| Court | House of Lords |
| Date | 31 July 2003 |
(a firm) and another and two other actions
[2003] UKHL 49
The Appellate Committee comprised:
Lord Steyn
Lord Hoffmann
Lord Hope of Craighead
Lord Millett
Lord Walker of Gestingthorpe
HOUSE OF LORDS
My Lords,
For the reasons given in the opinions prepared by my noble and learned friends Lord Hope of Craighead, Lord Millett and Lord Walker of Gestingthorpe I would also allow the appeal.
My Lords,
For the reasons given by my noble and learned friends, I too would allow this appeal.
My Lords,
The facts and legislative background have been described and analysed by my noble and learned friend Lord Millett, whose speech I have had the privilege of reading in draft and with which I am in full agreement. I should like to add just a few words of my own, simply to explain why I have come to the same conclusion as he has done on the issue which is before us in this appeal.
The question is whether the powers conferred by section 236 of the Insolvency Act 1986 on the office-holder of a company which is in liquidation or is the subject of administration or receivership proceedings can lawfully be exercised for the purpose only of obtaining evidence for use in disqualification proceedings under section 6 of the Company Directors Disqualification Act 1986 ("the Disqualification Act"). The expression "office-holder" is defined in section 234(1). It means the administrator, the administrative receiver, the liquidator or the provisional liquidator, as the case may be. For the purposes of section 236 the expression includes, in the case of a company which is being wound up by the court in England and Wales, the official receiver, whether or not he is the liquidator.
The applications with which this case is concerned were made by the official receiver. At the time they were made on 26 September 2000 he was not the liquidator of the company, as a liquidator was appointed in his place in June 2000 under section 137 of the Insolvency Act 1986. But the issue is of interest to all office-holders as defined in section 234(1), not just to the official receiver of a company which is being wound up by the court in England and Wales who is not its liquidator. This is because the powers conferred by section 236 are exercisable by anyone else who for the time being in relation to the company is an office-holder within the meaning of section 234(1). The jurisdiction which is given to the court to make the order does not distinguish between different kinds of office-holder. But the fact that they are exercisable by the official receiver, whether or not he is the liquidator, as well as by the persons mentioned in section 234(1), has an important bearing on the purpose or purposes for which those powers may be exercised.
Had it not been for the extended meaning which is given to the expression "office-holder" by section 236(1), one might have thought that the powers in sections 235 and 236 were conferred on the liquidator (to take the example of a company which is in liquidation) solely to assist him in the task of getting in and realising the assets of the company for the benefit of the creditors. It is clear that this is the purpose for which section 234 was enacted. Sections 235 and 236 appear in the same group of sections. At first sight they appear to have been designed to assist the liquidator to carry out these tasks as quickly and effectively as possible. Sections 234 and 236 replace with modifications, and extend to administration and receivership proceedings, sections 551 and 561 of the Companies Act 1985 which re-enacted sections 258 and 268 of the Companies Act 1948. Those sections were included in a group of sections dealing with the general powers of the court in the case of a winding up by the court. They were enacted long before the introduction by Part II of the Insolvency Act 1985 of the procedure now contained in sections 6 and 7 of the Disqualification Act for the disqualification of unfit directors of insolvent companies.
But account must now be taken of the fact that section 100 of the Insolvency Act 1985, which replaced section 561 of the Companies Act 1985 and was the immediate predecessor of section 236 of the Insolvency Act 1986, enabled the official receiver to apply to the court for an order under that section "whether or not he is the liquidator of the company". This provision, which was enacted for the first time in section 100(6) of the Insolvency Act 1985, is now incorporated in section 236(1) of the Insolvency Act 1986. It is plain that its purpose is to assist the official receiver in the performance of his investigative role, even although he may not for the time being be the liquidator for the company. The effect is to extend the scope of the powers which are now conferred by section 236. In his case, at least, it cannot be said that they may be used only for the purpose of getting in and realising the assets of the company for the benefit of the creditors.
In my respectful opinion Chadwick LJ's conclusion in the Court of Appeal [2001] EWCA Civ 1227, [2002] Ch 239, 254C-D, that those powers are conferred solely for the better discharge by the liquidator of his functions in the winding up begs the question which lies at the heart of this appeal. I think that it is self-evident that the powers are conferred for the better discharge of those functions or, in the case of administration or receivership proceedings, for the better discharge of their functions in those proceedings by the relevant office-holders. The question that has to be asked and answered is, what are those functions? Are they confined to the basic tasks of getting in and managing or realising the assets of the company?
The wording of section 236 of the Insolvency Act 1986 contains no such limitation. It is not concerned solely with the transfer of the property of the company to the office-holder. Its scope is indicated by subsection (3), which provides that the court may require any of the persons mention in subsection (2) to submit an affidavit to the court containing an account of his dealings with the company or to produce any books, papers or other records in his possession or under his control relating to the company or the matters mentioned in paragraph (c) of subsection (2). The matters mentioned in subsection (2)(c) are "the promotion, formation, business, dealings, affairs or property of the company". There may be a question as to how the court should exercise its discretion when it is making an order under this section. But the jurisdiction which the court is given is expressed in the widest terms.
No mention is made of the Disqualification Act in section 236 of the Insolvency Act 1986. But there is no doubt that these two measures are intended to be read together: see section 21 of the Disqualification Act which provides for the interaction of the two statutes, section 22 which ensures that the terms and expressions that they use are compatible and section 25 which states that they are to come into force simultaneously. There is also a close and important link between section 236(3) of the Insolvency Act 1986 and section 7(3) of the Disqualification Act. Section 236(3) of the Insolvency Act 1986 describes the information which may be the subject of an order made by the court under that subsection on the application of the office-holder. Section 7(3) of the Disqualification Act provides for the making by the office-holder of a report to the Secretary of State if it appears to him that the conditions for disqualification in section 6(1) of the Act are satisfied as respects a person who is or has been a director of the company. Information gathered under section 236(3) which leads to this conclusion must be reported.
I would conclude that the functions of the office-holder include the making of a report to the Secretary of State under section 7(3) of the Disqualification Act if he comes into the possession of information that leads to the conclusion that the conditions for disqualification are satisfied. As Vinelott J observed in Re Polly Peck International plc [1994] BCC 15, 16A-B, the purposes of the liquidation, the administration or the receivership, as the case may be, must include the gathering of information as to the conduct of the affairs of the company and those responsible for it in order that the office-holder can report to the Secretary of State as he is required to do by section 7(3) of the Disqualification Act; see also Bishopsgate Investment Management Ltd v Maxwell [1993] Ch 1, 47-48 per Stuart Smith LJ.
Section 7(4) of the Disqualification Act provides that the Secretary of State or the official receiver may require the liquidator, administrator or administrative receiver of a company, or the former liquidator, administrator or administrative receiver of a company, to furnish him with such information relevant to any person's conduct as a director of a company as he may reasonably require for the purpose of determining whether to exercise, or of exercising, his functions under that section. Here again the language of the subsection is in the widest terms. There is not even the qualification which is built into section 236(3) of the Insolvency Act 1986, that the information requested must be in the possession or under the control of the office-holder. The only qualifications are that the information must be relevant and the requirement must be reasonable.
What then are the conclusions that are to be drawn from these provisions? The Secretary of State and the official receiver are both given the power to require information to be furnished to them under section 7(4) of the Disqualification Act by an office-holder or former office-holder. But...
To continue reading
Request your trial
-
Ahmad Hamad Algosaibi and Brothers Company (“AHAB”) v Saad Investments Company Ltd (in Official Liquidation) (“SICL”) and Others
...the Economist and other news publications. 3111 Above and for the sake of ease of reference here: [1994] BCC 15 P16a-b {R1/22.3/2} 3112 [2004] 1 A.C. 158 [52] 3113 [2006] CILR 171 at [18] {R1/37.2.5/5} 3114 [2008] CILR 202 {R1/38.9.2} 3115 [2009] CILR 135 at [42] {R1/39.2.1} 3116 {E1/8}: Th......
-
Paul Sutton and Ge Captial Commercial Finance Limitedanglo Petroleum Ltd and Ge Capital Commecial Finance Ltd
...purpose, As Lord Millett put it in In re Pantmaenog Timber Co Ltd (in liquidation), Official Receiver v Wadge Rapps & Hunt and another [2003] UKHL 49, [2003] 2 BCLC 257, at paragraph 64: "… the court, which has a discretion to make or refuse an order, should be astute to see that the powers......
-
Re Pantmaenog Timber Company Ltd
... ... He ordered that Meade-King "do within 7 days from the date of this order produce to the Claimant or his solicitors copies of all correspondence, internal memoranda, books, records, accounts, receipts, invoices and other documentation in [their] custody, possession or power ... ...
-
Counsel General for Wales v Gareth Allen (as Official Receiver) (in his capacity as the liquidator of Baglan Operations Ltd (in compulsory liquidation))
...1986 Act is not a complete statement of all the functions of the Official Receiver as liquidator: see Re Pantmaenog Timber Co Limited [2004] 1 AC 158 per Lord Millett at [63]–[64]. Indeed, in that case Lord Walker noted (at [78]) the change over time in what could be called “the public prot......
-
THE ARBITRATION AND LITIGATION OF MINORITY SHAREHOLDER DISPUTES
...1 SLR 382 at [11]–[12]; Korea Asset Management Corp v Daewoo Singapore Pte Ltd[2004] 1 SLR(R) 671 at [36]; In re Pantmaenog Timber Co Ltd[2004] 1 AC 158 at [52]; and Eversendai Engineering Pte Ltd v Synergy Construction Pte Ltd[2004] SGHC 129 at [23]: … winding-up is a drastic remedy and th......
-
DOES JUDICIAL MANAGEMENT IN MALAYSIA SUFFICIENTLY EMBODY A RESCUE CULTURE?
...51(4) NILQ 509 at 510. 104 [1995] 2 AC 394; [1995] 2 WLR 312; [1995] 2 All ER 65. 105 Powdrill v Watson [1995] 2 AC 394 at 441–442. 106 [2004] 1 AC 158. Referred to in Re Kennedy (No 2) [2004] 3 HKC 411 at [49], per Kwan J. 107 Re Pantmaenog Timber Co Ltd [2004] 1 AC 158 at [52]. 108 United......
-
What Liquidation Does For Secured Creditors, And What It Does For You
...IA, ss 133and 236^237.50 Company Directors Disquali¢cation Act 1986,s 7(3).51 In Re PantmaenogTimber Co Ltd [2004] 1AC 158,177 at [64];see also at [75] and [77].52 ibid,181at [79].What Liquidation Does708 r2008 The Author. Journal Compilation r2008 The Modern LawReview Limited.(2008) 71(5) ......