Re Cromptons Leisure Machines Ltd

JurisdictionEngland & Wales
JudgeMR JUSTICE LEWISON
Judgment Date13 December 2006
Neutral Citation[2006] EWHC 3583 (Ch)
Docket NumberCase No: GLC130/06 & GLC 131/06
CourtChancery Division
Date13 December 2006
In the Matter of Cromptons Leisure Machines Limited

[2006] EWHC 3583 (Ch)

Before

Mr Justice Lewison

Case No: GLC130/06 & GLC 131/06

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Royal Courts of Justice

Strand

London WC2A 2LL

MR BARRY ISAACS (instructed by Isadine Goldman) appeared on behalf of the ADMINISTRATOR

MR JUSTICE LEWISON
1

In the case of an administration governed by the Insolvency Act 1986 (before its amendment by the Enterprise Act 2002), does the court have power to authorise the administrators to make a distribution to creditors who would be preferential creditors in the event of a winding-up? This question has been considered at first instance in recent times by no less than eight judges who have reached different conclusions. Six judges (Jacob, Jonathan Parker, Arden, Peter Smith and Pumfrey JJ and His Honour Judge Norris QC) have said yes, and two judges (Lightman and Rimer JJ) have said no. The question is now largely of historic interest because in administrations governed by schedule B1 of the Act, paragraph 65 of that schedule empowers an administrator to make distributions to creditors.

2

In Re Powerstore Trading Limited [1992] Ch 1280 Lightman J held that the court had no jurisdiction under section 18 to sanction the distribution to creditors. In Re Mark One (Oxford Street) Plc [1999] 1WLR 1445 Jacob J refused to follow Lightman J. He held that the court had power either under section 18 or in the exercise of its inherent jurisdiction to authorise the distribution. In Re Wolsey Theatre Company Limited [2001] BCC 486 Jonathan Parker J preferred the reasoning in Re Mark One (Oxford Street) Plc to that in Re Powerstore Trading Limited. So did Arden J in Re UCT (UK) Limited [2001] 1WLR 436 in which she held that the court had jurisdiction to authorise the distribution both under section 14 and under section 18 of the Act. In Re TXU (UK) Limited [2003] 2BCLC 341 Peter Smith J followed and applied Re Mark One (Oxford Street) Plc on the basis of the court's inherent jurisdiction and said that he would not have followed Re Powerstore Trading Limited on section 18. But in Re The Designer Room Limited [2005] 1WLR 1581 Rimer J followed Re Powerstore Trading Limited and doubted Re Mark One (Oxford Street) Plc insofar as Jacob J had relied on the court's inherent jurisdiction. On the other hand, Rimer J said that he found the reasoning of Arden J in Re UCT (UK) Limited wholly convincing. In Re Beauvale Group Limited [2006] BCC 912 His Honour Judge Norris QC, sitting as a judge of the Chancery Division, distinguished Re The Designer Room Limited on the ground that the application before him was made under section 18 rather than section 14 and refused to follow it insofar as Rimer J had doubted the court's inherent jurisdiction to sanction the distribution. In Re Spiralglobe Limited [2006] All ER (D) 276 Pumfrey J refused to follow The Designer Room Limited, although that case is only noted rather than fully reported. But the note does indicate that Pumfrey J considered the relevant authorities.

3

This is a recipe for chaos. We have arrived at the situation that Nourse J was at pains to avoid in Colchester Estates (Cardiff) Limited v Carlton Industries Plc [1986]...

To continue reading

Request your trial
6 cases
  • Dr Faramarz Shayan Arani v Cordic Group Ltd
    • United Kingdom
    • Queen's Bench Division (Commercial Court)
    • 7 April 2021
    ...laid down by Nourse J (as he then was) in Colchester Estates (Cardiff) Ltd v Carlton Industries Ltd [1986] Ch 80 and Re Cromptons Leisure Machines Ltd [2006] EWHC 3583 (Ch) where at [5], having approved the approach in the Colchester Estates case, Lewison J (as he then was) said as follow......
  • His Majesty's Revenue and Customs v Secretary of State for Work and Pensions and GS (TC)
    • United Kingdom
    • Upper Tribunal (Administrative Appeals Chamber)
    • Invalid date
    ...Lord Neuberger in Willers v. Joyce (Re Gubay (deceased) No 2) [2016] UKSC 44 at [9], Lewison J in Re Cromptons Leisure Machines Ltd [2006] EWHC (Ch) 3583, [2007] BCC 214 and HHJ Purle QC in Re BXL Services [2012] EWHC 1877 I therefore follow the decision of Upper Tribunal Judge Jacobs in JL......
  • Tradition Financial Services Ltd v Bilta (UK) Ltd and Others
    • United Kingdom
    • Court of Appeal (Civil Division)
    • 10 February 2023
    ...is an entirely conventional approach to authority: Colchester Estates (Cardiff) Ltd v Carlton Industries plc [1986] Ch 80; Re Cromptons Leisure Machines Ltd [2006] EWHC 3583 (Ch), [2007] BCC 214. The judge said at [79]: “With that, I turn to Mr Foxton, QC's article, which is – unsurprisi......
  • Lornamead Acquisitions Ltd v Kaupthing Bank HF
    • United Kingdom
    • Queen's Bench Division (Commercial Court)
    • 18 October 2011
    ...ER 863; applied in Colchester Estates (Cardiff) v Carlton Industries plc [1986] Ch 80, [1984] 2 All ER 601; itself applied in Re Cromptons Leisure Machines Ltd [2006] EWHC 3583 (Ch), [2006] All ER (D) 178 (Dec)." 54 Mr. Goldring's carefully structured argument has indeed raised doubts in......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT