Symm & Company Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Zacaroli |
| Judgment Date | 05 February 2020 |
| Neutral Citation | [2020] EWHC 317 (Ch) |
| Docket Number | Case No: CR-202-0000857 |
| Court | Chancery Division |
| Date | 05 February 2020 |
[2020] EWHC 317 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INSOLVENCY & COMPANIES LIST (ChD)
7 Rolls Building
Fetter Lane, London
EC4A 1NL
Mr Justice Zacaroli
Case No: CR-202-0000857
Penningtons Manches Cooper LLP for the Applicant/Directors of the Company
Judgment pursuant to Rule 3.25 of the Insolvency Rules 2016 and the order of Mr Justice Zacaroli dated 5 February 2020
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.
The solicitors for the directors (the “Directors”) of Symm & Company Limited (the “Company”) filed a notice of appointment of administrators (the “Administrators”) of the Company pursuant to Rule 3.25 of the Insolvency Rules 2016 by CE-File at 17:36 hours on Tuesday 4 February 2020. Rule 3.25 applies where there has been no prior notice of intention to appoint an administrator.
The matter was alerted to me on Wednesday 5 February 2020 by the administrative staff at the court, pursuant to the practice in relation to out-of-hours appointments of administrators which was announced by The Chancellor on 30 January 2020. That practice was announced in circumstances where there are conflicting decisions at first instance as to the effect of filing notices of appointment of administrators out of hours by CE-file. The practice is designed to ensure that in a case of an out-of-hours filing by CE-file, until a rule change is made which clarifies the position, a High Court Judge will make a determination on the papers or after hearing submissions as to the validity and correct date and time which should be endorsed upon the notice of appointment of administrators.
On Wednesday 5 February I made an order in the following terms:
(1) the notice of appointment be treated as having been validly filed at Court at 10:00 hours on Wednesday 5 February 2020 and that it be endorsed as having been filed and accepted by the Court at that time and date; and
(2) in consequence it is declared that the appointment of the Administrators of the Company took effect at 10:00 hours on Wednesday 5 February 2020.
These are my reasons for doing so.
The confusion that has developed in this area is the result of differing approaches being taken in a number of cases to the interaction between the Insolvency Act 1986 (the “1986 Act”), the Insolvency Rules 2016 (the “2016 Rules”), the Electronic Working Pilot Scheme, and amendments to the Insolvency Practice Direction described below.
The Insolvency Act and Rules
The ability of a company or its directors to appoint administrators out of court stems from Schedule B1 to the Insolvency Act 1986 (the “1986 Act”), inserted by the Enterprise Act 2002, s.248(2) and Schedule 16.
Paragraph 22 of Schedule B1 provides that a company or the directors of a company may make an appointment. Paragraph 26 provides for the giving of notice of intention to appoint an administrator (which does not apply in the circumstances of this case). Paragraph 29(1) provides that a person who appoints an administrator under paragraph 22 shall file with the court a notice of appointment and such other documents as may be prescribed. Paragraph 31 provides that the appointment of an administrator under paragraph 22 takes effect when the requirements of paragraph 29 are satisfied.
Paragraph 14 of Schedule B1 also makes similar provision for appointment out of court of an administrator by the holder of a qualifying floating charge (a “QFC Holder”). Paragraph 18(1) provides that a person who appointed an administrator under paragraph 14 shall file with the court a notice of appointment and such other documents as may be prescribed. Paragraph 19 provides that the appointment of an administrator under paragraph 14 takes effect when the requirements of paragraph 18 are satisfied.
For present purposes, the critical requirement (whether in paragraph 18 in relation to QFC Holders or in paragraph 29 in relation to directors) is the requirement to file with the court a notice of appointment.
The Insolvency Rules 1986 (the “1986 Rules”, being the relevant rules in force at the time of the enactment of Schedule B1) made further provision for the appointment of administrators out of court.
In the case of QFC Holders, Rule 2.16 of the 1986 Rules identified the prescribed form and made other provisions relating to the notice of appointment. By Rule 2.17(1), “three copies of the notice of appointment shall be filed with the court and shall have applied to them the seal of the court and be endorsed with the date and time of filing.”
The provisions of Rule 2.16 were, however, by sub-rule (6), made subject to Rule 2.19 “…the provisions of which apply when an appointment is to be made out of court business hours.”
Rule 2.19(1) provided as follows:
“The holder of a qualifying floating charge may file a notice of appointment with the court, notwithstanding that the court is not open for public business. When the court is closed (and only when it is closed) a notice of appointment may be filed with the court by faxing that form in accordance with paragraph (3). The notice of appointment shall be in Form 2.7B.”
By Rule 2.19(5) the appointment “shall take effect from the date and time of that fax transmission”. Rule 2.19(6) required a copy of the faxed notice of appointment to be forwarded to the court specified in the notice as the court having jurisdiction in the case, to be placed on the relevant court file. Rule 2.19(7) obliged the appointor to take three copies of the notice of appointment that had been faxed to the designated number, together with the transmission report showing the date and time of transmission, to the court on the next day that the court was open for business. The appointor also (by sub-rule (8)) had to attach notice providing full reasons for the out of hours filing.
The court would then (by sub-rule (9)) seal the copies and endorse them with the date and time when, according to the fax transmission report, the notice was faxed and the date and time when the notice and accompanying documents were delivered to the court.
Rule 2.19(10) provided that the appointment would cease to have effect if the requirements of sub-rule (7) were not completed within the time period indicated in that paragraph.
Rule 2.19(11) created a rebuttable presumption that the date and time shown on the appointor's fax transmission report was the date and time at which the notice was filed.
In the case of appointments by the company or its directors, Rule 2.23 contained detailed requirements relating to the notice of appointment. Rule 2.26(1) provided:
“Three copies of the notice of appointment shall be filed with the court and shall have applied to them the seal of the court and be endorsed with the date and time of filing.”
Importantly, there was no provision in the 1986 Rules for appointment by the company or its directors out of court hours.
As a result of amendments introduced by rule 2 and paragraph 41(2) of Schedule 1 to the Insolvency (Amendment) Rules 2010, a QFC Holder is now entitled to appoint an administrator out of court hours by sending the notice of appointment and accompanying documents to a designated email address instead of the designated fax number.
With effect from 6 April 2017, the relevant parts of the 1986 Rules were replaced by the Insolvency Rules 2016 (the “2016 Rules”). Appointment of administrators by the company and its directors (formerly Rules 2.20 to 2.26 of the 1986 Rules) now appear in Rules 3.23 to 3.26 of the 2016 Rules. Appointment by QFC Holders (formerly Rules 2.15 to 2.19 of the 1986 Rules) now appear in Rules 3.16 to 3.22 of the 2016 Rules.
The 2016 Rules were not intended to make substantive changes to the relevant parts of the 1986 Rules. The 2016 Rules thus continue to distinguish between, on the one hand, a QFC Holder and, on the other hand, the company or its directors. The Rules provide that only the former can appoint an administrator out of court hours, and they continue to apply the safeguards on such appointments (including that it ceases to have effect if the obligation to take copies of the notice of appointment, and other documents, to court when it is next open is not complied with).
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