The Registrar of Companies v Angela Swarbrick and Others
| Jurisdiction | England & Wales |
| Judge | Richard Spearman |
| Judgment Date | 13 May 2014 |
| Neutral Citation | [2014] EWHC 1466 (Ch) |
| Docket Number | Case No: HC12C00705 |
| Court | Chancery Division |
| Date | 13 May 2014 |
[2014] EWHC 1466 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Richard Spearman Q.C.
(sitting as a Deputy Judge of the Chancery Division)
Case No: HC12C00705
Daniel Margolin (instructed by the Treasury Solicitor) for the Applicant
Sarah Clarke (instructed by Addleshaw Goddard LLP) for the Respondents
Hearing dates: 3 April 2014
Richard Spearman Q.C.:
Introduction
This is an application by the Registrar of Companies ("the Applicant") to set aside an Order of Deputy Registrar Garwood dated 19 August 2013 ("the Order"). The Order was made on the application of the Respondents, who are the Joint Administrators of a company called Gardenprime Limited ("the Company"), dated 18 August 2013 ("the Respondents' Application"). It granted all the relief sought by the Respondents. The application is made under the liberty to apply contained in the Order. It comes before me pursuant to directions made on 21 January 2014 by Deputy Registrar Agnello QC.
The Respondents' Application concerned a statement of proposals for achieving the purpose of the administration ("the Proposals") which the Respondents had sent to the Applicant pursuant to paragraph 49 of Schedule B1 to the Insolvency Act 1986 (" IA 1986"), and which the Applicant had then placed on the register.
The background is that a dispute had arisen as to whether dissemination of the contents of the Proposals by making them publicly accessible placed the Company in breach of a contractual obligation to keep confidential certain information ("the Information"). The Respondents took the view that failing to deal with that dispute would prejudice the conduct of the administration, but that the dispute could be headed off if the Proposals were to be replaced on the register with amended proposals which omitted the material in dispute. Those were the Respondents' reasons for seeking the Order.
It forms no part of the Applicant's case to suggest that the Respondents could not have complied with the IA 1986 by filing the Proposals originally in the amended form (omitting the disputed material). Nor does the Applicant contend that the Order ought not to have been made either because the confidentiality of that material had already been destroyed or because there is any particular reason why that material ought to remain on the public record. The Applicant's central concerns are to challenge whether, and to establish the extent to which, it is open to the court to intervene in the performance of the Applicant's duties and powers. It is in that context that the Applicant seeks to have the Order set aside, on the basis that it directed the Applicant to replace the Proposals with amended proposals, after the Respondents had sent the Proposals to the Applicant, and the Applicant had lawfully placed them on the register.
In the result, the application primarily concerns questions of statutory interpretation.
Daniel Margolin appeared for the Applicant and Sarah Clarke for the Respondents. Preparation for the hearing, the conduct of the hearing, and the collation of an additional bundle of authorities, were conducted with commendable efficiency and co-operation. I am grateful to both Counsel for their clear and helpful submissions.
Factual background
There is no material dispute as to the facts, and they can be shortly stated:
(i) The Company is an investment company with 9 secured creditors (all banks) and one unsecured creditor (HMRC).
(ii) The Respondents were appointed on 21 May 2013 by a qualifying floating charge-holder. The purpose of the administration was to realise property with a view to making a distribution to secured creditors, by means of a pre-packaged sale of shares held by the Company.
(iii) This was achieved pursuant to a share purchase agreement dated 21 May 2013 made between (1) the Company (acting by the Respondents) as Seller, (2) Canada Square Investments Limited as Buyer and (3) the Respondents (the "SPA").
(iv) Clause 7 of the SPA imposed confidentiality obligations on the Company in relation to the Information.
(v) On 4 June 2013 the Respondents circulated to the creditors a report satisfying their obligations under Statement of Insolvency Practice 16. This contained, at least in part, either the Information or the disputed material – I draw a distinction between the two, as the Respondents do not accept that the disputed material included the Information — but no issue as to breach of confidence arose from that in light of the confidentiality obligations of the recipients.
(vi) On 11 June 2013 the Respondents sent the Proposals to (1) all known creditors and (2) the Applicant. Again, no breach of confidence issue arises as to (1).
(vii) The Buyer informed the Respondents that it objected to the inclusion of certain material in the Proposals, comprising or including information in respect of which it asserted a confidentiality obligation under Clause 7.1 of the SPA.
(viii) However, the Buyer did not seek an injunction to restrain further or continued publication of that disputed material.
(ix) Instead — it would seem with the Buyer's instigation or concurrence — the Respondents made the Respondents' Application seeking "the Court's assistance to enable [the Respondents] to replace the report filed with the Amended Report" (the latter being in a form acceptable to the Buyer).
(x) In the meantime, the contents of the Proposals (including certain material to the inclusion of which the Buyer objected) were the subject of an article on the Estates Gazette's (subscription-only) website.
The Order
The Order contained definitions which I adopt in this judgment. It provided that:
"1. Pursuant to CPR Part 39.2(3)(a) the hearing be heard in private on grounds [ sic] that publicity would defeat the object of the hearing.
2. Pursuant to rule 7.31A(7) Insolvency Rules 1986 ("IR 1986"), the evidence in support of this application and schedules to this order shall not be made available for inspection without the permission of the court.
3. Pursuant to rule 2.33A IR 1986 that [ sic] the specified parts (identified in Schedule I to this order) of the Joint Administrators' proposals dated 11 July 2013 ("the Proposals") filed in accordance with paragraph 49, Schedule B1 Insolvency Act 1986 (" IA 1986") shall not be sent to the Registrar of Companies.
4. A declaration is hereby made pursuant to s.1074 Companies Act 2006 ("CA 2006") that, as a consequence of the order in paragraph (3) above, the Proposals, which include the Specified Parts identified in Schedule I, contain unnecessary material which cannot readily be separated from the rest of the document and that the Proposals are accordingly not treated as meeting the requirements for proper delivery.
5. The Joint Administrators shall comply with their obligations under paragraph 49(4)(a) Schedule B1 IA 1986 and [rule] 2.33A(3) IR 1986 by filing amended proposals ("the Amended Proposals") at Schedule II to this order.
6. The Joint Administrators' obligation to send a copy of this order to the Registrar of Companies pursuant to [rule] 2.33A(4) shall be met by the Joint Administrators sending a copy of the order but omitting Schedule I.
7. The Registrar of Companies shall exercise his power pursuant to s. 1076 CA 2006 to remove the Joint Administrators' Proposals dated 11 July 2013 from the Register and accept the Amended Proposals.
8. Time is abridged in respect of service of this application.
9. Liberty to the Registrar of Companies to apply within 14 days of the service of this order."
As indicated above, this replicated what was sought by the Respondents' Application.
Paragraphs 1 and 2 of the Order and derogations from open justice
The application before me was essentially concerned with paragraphs 3–7 of the Order.
In this regard, the Applicant accepted that paragraphs 1 and 2 of the Order were both justified. While I intend no criticism of anyone, in my judgment this approach is not correct. The hearing before me was held in public, and I consider that the hearing in front of the Deputy Registrar, also, could and should have been heard in public.
Any need to preserve the confidentiality of information which forms the subject of an application, and to avoid the consequence that the hearing renders nugatory the purpose for which the application is made, is generally capable of being catered for by other measures. For example: preparing witness statements with confidential exhibits; not reading out the contents of some documents; making an order under CPR 31.22(2) (so that a document is not made generally accessible by being deployed in open court); and, in the circumstances of this case, making directions as in paragraph 2 of the Order.
As stated in CPR 39.2(1), the general rule is that a hearing is to be in public.
Ambrosiadou v Coward [2011] EMLR 419 concerned private information which the Court of Appeal held should be protected by an injunction from being made public. Lord Neuberger MR said at [52]: "In many cases involving alleged confidential information, one or both of the parties wish the hearing to take place in private, because of understandable concern that confidential information may be revealed in the course of the hearing. Before applying for a hearing to be in private, the parties and their advisers should consider whether such concerns can be accommodated by a less drastic course". Leveson LJ said at [54]: "it is almost invariably possible to conduct a hearing of this nature in public and in such a way as demonstrates adherence to the principle of open justice, while at the same time ensuring...
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