William Wright, David John Pike & Neil David Gostelow v HMV Ecommerce Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Barling |
| Judgment Date | 24 January 2019 |
| Neutral Citation | [2019] EWHC 903 (Ch) |
| Docket Number | Ref. CR-2018-011102 |
| Court | Chancery Division |
| Date | 24 January 2019 |
[2019] EWHC 903 (Ch)
TRANSCRIPT OF PROCEEDINGS
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES LIST (CHD)
IN THE MATTER OF HMV ECOMMERCE LIMITED (CO. NO. 09321397)
AND IN THE MATTER OF HMV RETAIL LIMITED (CO. NO. 08380689)
AND IN THE MATTER OF THE INSOLVENCY ACT 1986
THE HONOURABLE Mr Justice Barling
Ref. CR-2018-011102
CR-2018-011094
and
Ms Kyriakides (instructed by Addleshaw Goddard LLP) appeared on behalf of the Applicants
The Respondent companies were not represented
On 28 December 2018 the directors of the two companies in question filed notices of appointment of administrators. The notices were filed with the court electronically at 5.54pm. Later in the evening of the same day, there was a telephone hearing in which I heard submissions from Ms Kyriakides of counsel, who also appears for the applicants today. I made an order in respect of each company declaring that the administrators were validly appointed as joint administrators of the companies and that their appointment took effect as at 17.54 that day, namely at the time at which the notices were electronically filed.
At that time, of course, the court office is not open, and the filing was purportedly made pursuant to Practice Direction 51(o) of the Electronic Working Pilot Scheme, which effectively began sometime in 2015 and has been in operation ever since. Paragraph 2.1 of the Practice Direction states that electronic working enables parties to issue proceedings and file documents on line 24 hours a day, every day, all year round, including during out of normal court office opening hours and on weekends and bank holidays. Certain exceptions are referred to, which do not apply to the present case, in which the appointment of administrators is made by the directors of the company on question. Subparagraph c provides for an exception
“where the filing is of a notice of appointment by a qualifying floating charge holder under Chapter 3 of Part 3 of the Insolvency Rules 2016, and the court is closed, in which case the filing must be in accordance with Rule 3.20 of the Insolvency Rules 2016”.
No issue arises in this matter as to the power of the company or its directors to make the appointment which they did. The question which arises is whether the electronic filing on 28 December 2018 was a breach of the Insolvency Practice Direction which came into force in July 2018, and which neither the court nor the legal teams acting for the directors, nor presumably the administrators, had in mind when the orders to which I have referred were made.
Paragraph 8.1 of that Practice Direction states as follows:
“Attention is drawn to paragraph 2.1 of the Electronic Practice Direction 51O — The Electronic Working Pilot Scheme, or to any subsequent Electronic Practice Direction made after the date of this IPD, where a notice of appointment is made using the electronic filing system. For the avoidance of doubt, and notwithstanding the restriction in sub-paragraph (c) to notices of appointment made by qualifying floating charge holders, paragraph 2.1 of the Electronic Practice Direction 51O shall not apply to any filing of a notice of appointment of an administrator outside Court opening hours, and the provisions of Insolvency Rules 3.20 to 3.22 shall in those circumstances continue to apply.”
The administrators are concerned that the somewhat byzantine terminology of that provision means that the notice of appointment of the administrators in the present case was made in breach of that rule, because it was made under the Electronic Working Pilot Scheme outside court opening hours. These are generally presumed to cease at 4.30pm on a working day, whereas this notice was given approximately one hour and 24 minutes after that time.
The curious aspect of paragraph 8.1 is that it states that the provisions of Insolvency Rules 3.20 to 3.22 shall in those circumstances continue to apply. However, those paragraphs of the Rules are only dealing with a notice of appointment filed by the holder of a qualifying floating charge and do not have any relevance to a notice of appointment filed by the company or its directors. So, the concept of those rules “continuing” to apply can only be a reference to a notice of appointment filed by a qualified floating charge holder.
Nevertheless, because there is an ambiguity in the rule, the administrators have quite properly considered that they should remedy any problem in view of the urgency and importance of this administration, and the fact that, as one knows from the press, matters have reached a delicate stage.
The importance of the time of filing of a notice of appointment is not controversial. The administration takes effect when the requirements of paragraph 29 of Schedule B1 to the Insolvency Act 1986 have been complied with. One of the requirements of paragraph 29 of the Schedule is that the person who appointed the administrator of the company under paragraph 22 shall file (amongst other things) a notice of appointment with the court. Paragraph 31 states that the appointment of an administrator under paragraph 22 takes effect when the requirements of paragraph 29 are satisfied. It was for that reason that the time of...
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