Philp Stephen Wallace (as Liquidator of Carna Meats (UK) Ltd) v George Wallace

JurisdictionEngland & Wales
CourtChancery Division
JudgeAdam Johnson
Judgment Date25 Sep 2019
Neutral Citation[2019] EWHC 2503 (Ch)
Docket NumberCase No: CR-2016-000565

[2019] EWHC 2503 (Ch)

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES (ChD)

COMPANIES COURT

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

Adam Johnson QC SITTING AS A JUDGE OF THE HIGH COURT

Case No: CR-2016-000565

Between:
Philp Stephen Wallace (as Liquidator of Carna Meats (UK) Limited)
Applicant
and
George Wallace
Respondent

Emma Read (instructed by Clarke Mairs LLP) for the Applicant

The Respondent did not appear and was not represented

Hearing date: 11 July 2019

Further Written Submissions: 16 July 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.

Adam Johnson QC:

Introduction

1

The present Application raises an interesting question about the scope of section 236 of the Insolvency Act 1986 (“ IA”). This has been described as the question whether the section has extraterritorial effect. More particularly, the question is whether an Order may be made under the section directed to a Respondent resident abroad, in this case in the Republic of Ireland. I should say straightaway that in addressing this question, I have been greatly assisted by the thorough submissions (both oral and in writing) which I have received from Ms Emma Read, who appeared before me on behalf of the Applicant.

Facts

2

The factual background could not be more straightforward.

3

Carna Meats (UK) Limited (“ the Company”) was incorporated on 4 May 2010 and carried on business as a meat wholesaler. A winding-up Order was made against it on 8 December 2015 and Mr Philip Stephen Wallace was appointed Liquidator on 13 June 2016. He is the present Applicant.

4

The last accounts filed by the Company were those for the year ended 31 May 2014. The assets listed in those accounts include debtors in the amount of £809,791. As the Liquidator therefore explains in his evidence, it appears that the Company's debtors are likely to be a significant asset in the liquidation.

5

The Applicant also says, however, that he has been hampered in his investigations into the Company's affairs by a lack of any books and records. The Directors as at the date of liquidation were a Mr and Mrs Mallon. They say they do not have any books and records themselves, but in a Preliminary Information Questionnaire Mr Mallon gave details of a Mr Craen of BFS (Sussex) Limited as someone who had acted for the company in connection with its financial affairs, and identified the Respondent, Mr George Wallace (“ Mr Wallace”), as the Company's former bookkeeper. Mr Mallon gave an address for Mr Wallace in the Republic of Ireland.

6

Correspondence followed with both Mr Craen and Mr Wallace. Mr Craen, in his letter of 16 September 2016, said that all records of the Company were held by Mr Wallace. As regards Mr Wallace himself, the Liquidator wrote to him on 5 July 2016, and the Liquidator's solicitors wrote on 10 October 2016. Both letters referred to the Liquidator's understanding that Mr Wallace had been the Company's bookkeeper and asked for information about the Company's books and records. Neither letter prompted a response. A further letter followed on 1 November 2016, in which the Liquidator's solicitors said that unless they heard from Mr Wallace as a matter of urgency they would seek instructions from their client to apply to the Court for his examination under the Insolvency Act 1986.

7

Mr Wallace eventually replied on 21 November 2016. Notably, in his short response he did not deny that he had been the Company's bookkeeper or deny that he had access to the Company's books and records. Instead, he said he was owed a considerable sum of money by [the Company] which remains outstanding.”

8

In a further letter dated 19 December 2016, the Liquidator's solicitors acknowledged Mr Wallace's comment, and asked him to provide a proof of debt for forwarding to the Liquidator. Nonetheless, they pointed out that Mr Wallace was under a statutory duty to assist their client, and repeated their request that he respond to the Liquidator's inquiries as a matter of urgency.

9

No response was received. An Application Notice was then issued on 27 November 2017, seeking an Order that:

“1. The Respondent shall deliver up all documents, books and records of Carna Meats (UK) Limited (‘the company’) in his control or possession to the Applicant within 28 days, to include but not limited to:

1.1 Full copies of the annual accounts.

1.2 Any draft or management accounts.

1.3 Details of the fixed asset register.

1.4 A breakdown of the company's debtors and any documents relating to the debts owed to the company.

1.5 Sage records.

1.6 The company's cashbook.

2. The Respondent shall pay the costs of this application”.

10

Upon issuing the Application Notice, the Liquidator's solicitors completed Form N510, headed: Notice for Service out of the Jurisdiction where permission of the Court is not required. Under the heading “ Part 2” on Form N510, which is headed Service of the Claim Form in any jurisdiction other than England and Wales, Scotland and Northern Ireland, the Liquidator's solicitors completed the first box, and thus gave the statement below, certifying the case as one falling within CPR 6.33(1). The relevant statement was:

“I state that each claim made against the defendant to be served and included in the claim form is a claim which the court has power to determine under [the Civil Jurisdiction and Judgments Act 1982] or [the Lugano Convention], and

(a) no proceedings between the parties concerning the same claim are pending in the courts of any other parts of the United Kingdom or any other Convention territory; and

(b) the defendant is domiciled in a Convention country, namely the Republic of Ireland”.

11

Thereafter, the Application Notice was provided to the Foreign Process Section at the Royal Courts of Justice and was sent on to the relevant authorities in Ireland. I have been provided with a Certificate of Service signed by an official at the Circuit Court in Monaghan, Ireland, stating that on 28 December 2017 the Application was sent by registered post to the Respondent at Cuanmuire, Monaghan Road, Bally Bay, Co. Monaghan, Ireland. That is the address used in previous correspondence with Mr Wallace and indeed is the address given by him in his own letter dated 21 November 2016.

Section 236 IA 1986

12

Section 236 is headed “ Enquiry into company's dealings, etc”, and provides relevantly as follows:

(1) This section applies as does section 234; and it also applies in the case of a company in respect of which a winding-up order has been made by the Court in England and Wales as if references to the office-holder included the official receiver, whether or not he is the liquidator.

(2) The court may, on the application of the office-holder, summon to appear before it –

(a) any officer of the company,

(b) any person known or suspected to have in his possession any property of the company or supposed to be indebted to the company, or

(c) any person whom the court thinks capable of giving information concerning the promotion, formation, business, dealings, affairs or property of the company.

(3) The court may require any such person as is mentioned in sub-section 2(a) to (c) to submit to the court 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 the sub-section.”

13

The section goes on to set out machinery for enforcing attendance by persons who have been summoned by means of a bench warrant (subsections 236(4)-(4)). The following section, section 237, confers additional and complementary powers on the Court, and provides at section 237(3):

“The court may, if it thinks fit, order that any person who if within the jurisdiction of the court would be liable to be summoned to appear before it under section 236 or this section shall be examined in any part of the United Kingdom where he may for the time being be, or in a place outside of the United Kingdom”.

14

It is clear that the purpose of an order under section 236 is to facilitate the functions of the liquidator. In British & Commonwealth Holdings plc (Joint Administrators) v. Spicer and Oppenheim [1993] AC 426, Lord Slynn of Hadley (at p. 438D) adopted the following statement of Buckley J. in In Re Rolls Razor Ltd [1968] 3 All ER 698, at p.700 (made in connection with s. 268 Companies Act 1948) as a description of the overall purpose of section 236:

The powers conferred by [the section] are powers directed to enabling the court to help a liquidator to discover the truth of the circumstances in connection with the affairs of the company, information of trading, dealings and so forth, in order that the liquidator may be able, as effectively as possible, and, I think, with as little expense as possible … to complete his function as liquidator, to put the affairs of the company in order and to carry out the liquidation in all its various aspects, including, of course, the getting in of any assets of the company available in the liquidation.”

15

At pp. 439–440, Lord Slynn explained that the power under section 236 is a discretionary one, which involves a balancing of factors (see at p.439D-E and p. 439F-p.440A):

“The proper case is one where the administrator reasonably requires to see the documents to carry out his functions and the production does not impose an unnecessary and unreasonable burden on the person required to produce them in the light of the administrator's requirements. An application is not necessarily unreasonable because it is inconvenient for the addressee of the application or causes him a lot of work or may make him vulnerable to...

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