Powdrill and Another v Watson and Another ; Talbot and Another v Cadge and Another ; Talbot and Another v Grundy and Another
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE DILLON,LORD JUSTICE LEGGATT,LORD JUSTICE HENRY |
| Judgment Date | 22 February 1994 |
| Judgment citation (vLex) | [1994] EWCA Civ J0222-4 |
| Docket Number | No CHANF 93/1549/B |
| Court | Court of Appeal (Civil Division) |
| Date | 22 February 1994 |
[1994] EWCA Civ J0222-4
On Appeal from the High Court from Mr Justice Evans-Lombe
Before: Lord Justice Dillon Lord Justice Leggatt Lord Justice Henry
No CHANF 93/1549/B
IN THE SUPREME COURT OF JUDICATURE
THE COURT OF APPEAL (CIVIL DIVISION)
CHANCERY DIVISION
MR MICHAEL CRYSTAL QC and MR MARK PHILLIPS (Instructed by Wilde Sapte, London) appeared on behalf of the Appellants.
MR ROBIN POTTS QC and MR RICHARD SNOWDEN (Instructed by Burrough & Co, Cardiff) appeared on behalf of the Respondents.
Tuesday, 22nd February, 1994
This is an appeal by Mr Powdrill and Mr Atkinson who are the Joint Administrators of a company called Paramount Airways
Ltd against an order made by Evans Lombe J in the Companies Court on
27th July 1993. The Respondents are two former employees of the company, Captain Watson and Captain Unwin. There is a further point taken, in effect by cross appeal by a Respondent's notice to which I shall have to come.
The general question arises in the field relating to the continued employment by the company, after the appointment of the
Adminstrators, of staff previously in the company's employment and the extent of the benefits which the staff so employed are entitled to claim as administration expenses within the meaning of Section 19 (5) of the Insolvency Act 1986.
The basic facts are that the company operated a charter airline from Bristol Airport and certain other airports in the United Kingdom. The Administrators were appointed by Warner J by an order of 7th August 1989. The Administrators sent a letter to all employees on the 14th August 1989 as follows:
"I write to advise you that we were appointed Joint Administrators of the above Company by an Order of the High Court dated 7th August 1989. Under the provisions of the Insolvency Act 1986 the Joint Administrators act as agents of the Company.
"We are currently investigating the Company's position but as yet we are uncertain as to the true contractual position between yourself and the Company.
"Nothing in this letter is to be taken to affect the true identity of your employer, however, we should like to take this opportunity of reassuring you that the Company will continue to pay your monthly salary during the interim period, including that payable on 31st August 1989, together with any other sums which you are contractually entitled to pursuant to the terms and conditions of your Contract of Employment. We hope that we may have your co-operation during this period.
"We wish to make it clear that the Joint Administrators act at all times as agents of the Company and without personal liability. The Administrators are not and will not at any future time adopt or assume personal liability in respect of your Contracts of Employment.
signed
R. A. Powdrill in his capacity as Joint Administrator of Paramount Airways Limited acting as its agent and without personal liability."
Following that, a question arose in relation to keeping the airline captains and first officers in the employment of the company while it was in Administration and it was hoped that it might be able to arrange to sell the business as a going concern. In those circumstances the Administrators, in September 1989, wrote a further letter to all captains and first officers as follows:
"Further to our meeting on 21st September 1989 and following representations from Mr W B Morgan, we would propose making the following additional payments to Captains and First Officers.
"These payments will be made to all Captains and First Officers remaining in employment and working for Paramount Airways Limited as at 31st October 1989, or as at the date of a sale of the business if earlier; and who have not tendered their resignation by such time.
"Payments will be made for the period commencing 1st September 1989 and will be apportioned if foreshortened by a sale.
"If the Administrators remain in office after 31st October 1989, this arrangement will continue on a monthly basis until further notice with each month end date being relevant for not having tendered resignations.
"The following payments are proposed:
"CAPTAINS
"For September —£300
"For October and each subsequent months —£400
"FIRST OFFICERS
"For September —£250
"For October and each subsequent months —£300
"The first payment will be made with the October salary and will include September payments.
"This arrangement will not be binding upon the company following the Administrators' resignation.
"The Administrators are not adopting any or all terms of any contracts of employment or service you have and act only as agents of Paramount Airways Limited and without personal liability."
On 3rd November 1989 the statutory creditors' meeting was held in accordance with the scheme of the Act and it passed a resolution
approving that the Administrators should seek to sell the company as a going concern. From their appointment until, at any rate, the end of September the Administrators had been concerned not only to work out what could be put to the creditors at the creditors' meeting but to keep the charter airline business operating through the peak holiday season of that year. Despite the approval of the meeting of 3rd November, by the 30th November the Administrators found that they had been unable to find any buyer and, apart from a Wet Lease of a single plane, which for present purposes is immaterial, the operations of the company had been suspended. Accordingly, on the 30th November a meeting was held when the employees were told that that was the state of affairs. On the 5th December 1989 letters of dismissal were sent to all staff, except possibly the few required for the Wet Lease
arrangement, terminating their Contracts of Employment summarily and, indeed, retrospectively, namely as from 30th November.
In September 1991 each of the Respondents, Captain Watson and Captain Unwin, issued a petition under Section 27 of the Insolvency Act claiming what they said to be their entitlement as a result
of their dismissals. The very proper reaction of the Administrators to that was that they issued a summons on the 31st October, seeking the directions of the Companies' Court on these matters and they joined the Respondents as parties to the summons.
The system of Administration is a new system recommended by the Cork Committee which is introduced in the Insolvency Act of 1986. The scheme is under Section 8 (1):
"….. if the court -
(a) is satisfied that a company is or is likely to become unable to pay its debts (within the meaning given to that expression by section 123 of this Act), and
(b) considers that the making of an order under this section would be likely to achieve one or more of the purposes mentioned below, the court may make an administration order in relation to the company.
(2) An administration order is an order directing that, during the period for which the order is in force, the affairs, business and property of the company shall be managed by a person ("the administrator") appointed for the purpose by the court."
The purposes for whose achievement an Administration Order may be made include, under Section 8 (3), (a) the survival of the company and the whole or any part of its undertaking as a going concern and (b) a more advantageous realisation of the company's assets than would be effected on a winding up.
I need not go in great detail into the scheme of the Act, but it is pertinent to note that under Section 11 the effect of the making of an Administration Order is that any petition for the winding up of the company shall be dismissed and any Administrative Receiver of the company shall vacate office.
It is further provided by Section 11 (3) that -
"During the period for which an Administration Order is in force -
(a) no resolution may be passed or order made for the winding up of the company;
(b) no administrative receiver of the company may be appointed;
(c) no other steps may be taken to enforce any security over the company's property, or re-possess goods in the company's possession under any hire-purchase agreement, except with the consent of the administrator or the leave of the court and subject (where the court gives leave) to such terms as the court may impose; and
(d) no other proceedings and no execution of other legal process may be commenced or continued, and no distress may be levied, against the company or its property except with the consent of the administrator or the leave of the court and subject (where the court gives leave) to such terms as aforesaid."
Section 14 (1) provides:
"The administrator of a company -
(a) may do all such things as may be necessary for the management of the affairs, business and property of the company, and
(b) without prejudice to the generality of paragraph (a), has the power specified in Schedule 1 to this Act."
He is further given power under sub-section (2) to remove any director of the company and appoint any person to be a director of it
whether to fill a vacancy or otherwise and under sub-section (3) to apply to the court for directions in relation to any particular matter arising in connection with the carrying out of his functions.
It is also provided by Section 14 (5) that, in exercising his powers, the administrator is deemed to act as the company's agent.
He is not, therefore, personally liable under contracts he makes or
contracts which he adopts.
Section 15 (1) provides that -
"The administrator of a company may dispose of or...
To continue reading
Request your trial
-
Krasner v McMath
...of notice as priority. It seems to me that concern is nothing like for example the concerns that arose as a result of the decision in Powdrill v Watson [1994] 2 BCLC 118 C.A. The result of that decision and subsequent House of Lords decision ( [1995] 2 AC 394) will be dealt with further in ......
-
Powdrill and Another v Watson and Another ; Talbot and Another v Cadge and Another ; Talbot and Another v Grundy and Another
...this appeal. The decision of Evans-Lombe J. was, in substance, affirmed by the Court of Appeal (Dillon, Leggatt and Henry L.JJ.): see [1994] 2 All E.R. 513. 16 Leyland DAF 17The Leyland DAF receivers were appointed on 3 February 1993. At the date of the appointment Leyland DAF owed approxi......
-
Item Software (UK) Ltd v Fassihi
... ... Powdrill v Watson [ 1995 ] ICR 1100 ; [ 1995 ] 2 ... could not accept a directorship of another company. It is simply a duty which makes the ... ...
-
Roger Lindop V. Stuart Noble & Sons Ltd & Others
...After the 1985 amendments, the next stage in the development of the law was the decision of the Court of Appeal in Powdrill v Watson [1994] 2 BCLC 118. That was an administration case. The administrators wrote to employees a few days after their appointment stating that the company would co......
-
Table of Cases
...& Co v Cronk [1895] 1 QB 265 247 Oxford Pharmaceuticals Ltd, Re [2009] EWHC 1753 (Ch), [2010] BCC 834 548 Paramount Airways Ltd, Re [1994] 2 All ER 513, [1993] Ch 233 165, 166, 556, 558 Paramount Airways Ltd, Re, reported as Bristol Airport plc v Powdrill [1990] Ch 744 125 Parsons v Soverei......
-
Administration
...[2007] EWHC 1933 (Ch), [2008] BCC 119. 528 IA 1986, Sch 1, para 13. 529 IA 1986, Sch B1, para 66. 530 IA 1986, Sch B1, para 99 531 [1994] 2 All ER 513 at 522; see also Re Atlantic Computer Systems plc [1992] Ch 505; and Re Salmet International Ltd [2001] BCC 796. 166 Law of Insolvent Partne......
-
Receivership
...LLP Regulations 2001, reg 5). See further on the adoption of employment contracts, Powdrill v Watson, Re Paramount Airways Ltd (No 3) [1994] 2 All ER 513. after his appointment. 112 An administrative receiver’s liability (but not that of other receivers appointed under an instrument) in rel......
-
PERSONAL LIABILITY OF JUDICIAL MANAGERS AND RECEIVERS UNDER THE COMPANIES ACT
...Act 1986. 9 [1995] 2 WLR 312, [1995] 1 BCLC 386. 10 Re Specialised Mouldings Ltd (13 February 1987, ChD, unreported); Powdrill v Watson[1994] 2 All ER 513, [1994] 2 BCLC 118, [1994] ICR 395; Re Leyland DAF Ltd (No 2), Re Ferranti International plc[1995] 2 WLR 312, [1994] 2 BCLC 760. 11 Purs......