The Governor & Company of the Bank of Ireland and Another v Colliers International Uk Plc ((in Administration)) and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice David Richards: |
| Judgment Date | 24 October 2012 |
| Neutral Citation | [2012] EWHC 2942 (Ch) |
| Docket Number | Case No.: 2747 of 2012 |
| Court | Chancery Division |
| Date | 24 October 2012 |
In the Matter of Colliers International Uk Plc (in Administration)
and
In the Matter of the Insolvency Act 1986
[2012] EWHC 2942 (Ch)
The Honourable Mr Justice David Richards
Case No.: 2747 of 2012
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT
Edward Knight (instructed by Elborne Mitchell LLP) for the Applicants
The Respondents did not appear and were not represented
Hearing date: 3 October 2012
The Governor and Company of the Bank of Ireland and its wholly owned English subsidiary, Bank of Ireland (UK) PLC, apply for retrospective permission to institute legal proceedings against a company in administration, Colliers International UK PLC (the company).
The application is made under paragraph 43(6) of Schedule B1 to the Insolvency Act 1986. Paragraph 43 provides for a moratorium on the enforcement of security and on various types of legal process against a company in administration or its property, and contains the following directly relevant provisions:
"(1) This paragraph applies to a company in administration.
(6) No legal process (including legal proceedings, execution, distress and diligence) may be instituted or continued against the company or property of the company except —
(a) with the consent of the administrator, or
(b) with the permission of the court."
Similar provisions in the Insolvency Act 1986 apply to other types of insolvency proceedings. Section 130(2) provides:
"When a winding-up order has been made or a provisional liquidator has been appointed, no action or proceeding shall be proceeded with or commenced against the company or its property, except by leave of the court and subject to such terms as the court may impose."
Section 285(3) provides:
"After the making of a bankruptcy order no person who is creditor of the bankrupt in respect of a debt provable in the bankruptcy shall -
(a) have any remedy against the property or person of the bankrupt in respect of that debt, or
(b) before the discharge of the bankrupt, commence any action or other legal proceedings against the bankrupt except with the leave of the court and on such terms as the court may impose."
The only issue requiring any detailed consideration on the present application is whether the court has jurisdiction under paragraph 43(6) to give permission retrospectively for the commencement of proceedings.
The administrators of the company do not oppose the application and have made clear that they have no objection to the institution of the claim or the retrospective grant of permission.
The facts are straightforward. The company is a firm of property valuation surveyors which in 2006 prepared valuations of care homes let to and operated by companies in the Southern Cross group, instructed by the applicants for the purpose of providing finance for the purchase of the care homes. The valuation reports were provided in January 2006 and advances were made between 1 February and 4 July 2006.In July 2011 companies in the Southern Cross Group went into administration. Valuations obtained by the applicants in 2011 indicated much reduced values for the properties and they started to investigate whether there had been negligence in the preparation of the valuations by the company in 2006.
The company went into administration on 28 March 2012. Notification of potential claims was given by the applicants to the administrators on 23 May 2012. Disclosure of relevant information was requested by the applicants and, while the company's solicitors have agreed to provide it, disclosure has yet to take place. A series of standstill agreements were made between the applicants and the company, with the agreement of the administrators, to prevent time running on the applicants' claims for limitation purposes. The last of these agreements expired without an extension on 11 September 2012. Ten claim forms were issued by the applicants on 13 September 2012, claiming damages for negligence against the company.
Assuming the Court has jurisdiction, this is in my judgment a clear case for the grant of permission, having regard to (1) the position adopted by the administrators, (2) the circumstances in which it became necessary to issue the claim forms as a matter of urgency, (3) the subject matter of the claims which make it suitable to be dealt with by way of a Part 7 claim rather than the submission of a proof of debt and (4) the existence of professional indemnity insurance in respect of the claims, to which the provisions of the Third Party (Rights against Insurers) Act 1930 apply.
The issue whether there is jurisdiction to grant retrospective permission for the commencement of legal proceedings has been considered, in the context of insolvency proceedings, in a number of cases.
It appears that from the early 1890s to 1982, it had been the practice of courts not to treat proceedings commenced without permission as a nullity but, in appropriate cases, to give leave for the continuation of the proceedings: see Re Saunders [1997] Ch 60 at 70. However, Milmo J in Wilson v Banner Scaffolding Limited (The Times 22 June 1982) held that proceedings commenced against a company in compulsory liquidation without prior permission were a nullity and could not therefore be continued with permission. This was followed by Rattee J in Re National Employers Mutual General Insurance Association Limited [1995] 1 BCLC 232.
The issue arose for decision in Re Saunders, in the context of proceedings commenced against a bankrupt. Following adversarial argument over three days and a consideration of a large number of United Kingdom and Commonwealth authorities, Lindsay J came to the clear conclusion that the earlier decisions of Milmo J and Rattee J were wrong and that legal proceedings commenced against a bankrupt or a company in compulsory liquidation were not a nullity and that the court had jurisdiction to give retrospective permission for their commencement.
The contrary view was taken by HH Judge Kershaw QC (sitting as a High Court Judge) in Re Taylor [2006] EWHC 3029 (Ch), [2007] Ch 150. He rejected an unopposed application for retrospective permission to commence an action against a defendant who, the claimant later discovered, had been adjudged bankrupt before the issue of the claim form. In a lengthy reserved judgment, the judge reviewed all the authorities and submissions which had been considered by Lindsay J, as well as an additional decision of the Northern Ireland Court of Appeal and certain other matters, and concluded that the decision of Lindsay J in Re Saunders was wrong.
Judges at first instance have since preferred the decision of Lindsay J in Re Saunders: see Godfrey v Torpy [2007] BPIR 919, a decision of Peter Leaver QC (sitting as a High Court Judge) following adversarial argument, and Bank of Scotland PLC v Breytenbach [2012] BPIR 1, a decision of Chief Registrar Baister. The fact that in the latter case the Chief Registrar reached his decision on an unopposed application after a careful review of the relevant authorities demonstrates that uncertainty persists on this point, which appears also from commentary in textbooks: Sealy & Milman: Annotated Guide to the Insolvency Legislation (2012 15 th ed.) Vol. 1 at p.340 and Muir Hunter on Personal Insolvency at 3–740.
A requirement for permission, whether from the court or others, for the commencement of proceedings has for many years appeared in legislation in a number of very different contexts, in addition to insolvency, including charities and mental health.
In all or many of these provisions, permission is clearly stated as a requirement, but in none of them are the consequences of a failure to obtain permission before the commencement of the proceedings spelt out. The provisions do not state whether the proceedings, commenced without such permission, are a nullity or whether the failure to obtain prior permission can be cured by a retrospective grant of permission.
In Seal v Chief Constable of South Wales Police [2007] UKHL 31, [2007] 1 WLR 1910, the House of Lords considered the effect of the requirement for permission to commence proceedings under section 139(2) of the Mental Health Act 1983. At [7] Lord Bingham of Cornhill referred to the decision of the Court of Appeal in Rendall v Blair 45 Ch D 139 on a similar provision in the Charitable Trusts Act 1853, to decisions on the Limitation Acts and to Re Saunders. In all those cases the prohibition on the commencement of proceedings without permission was expressed in unqualified terms. Lord Bingham said that the variation of language between section 139(2) and those other provisions:
"is not so marked as, without more, to warrant a radically different conclusion, and the welcome tendency to prefer substance to form must generally discourage the invalidation of proceedings for want of compliance with a procedural requirement. While, therefore, I incline to favour the Chief Constable's reading of section 139(2), I do not think the answer to a question such as this should ordinarily turn on a detailed consideration of the language used by Parliament in one provision as compared with that used in another. The important question is whether, in requiring a particular condition to be satisfied before proceedings are brought, Parliament intended to confer a substantial protection on the putative defendant, such as to invalidate proceedings brought without meeting the condition, or to impose a procedural requirement giving rights to the defendant if a...
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