Winsor and Special Railway Administrators of Railtrack Plc; Re, Railtrack Plc ((in Administration)) (No 2)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Waller,Lord Justice Robert Walker |
| Judgment Date | 10 July 2002 |
| Neutral Citation | [2002] EWCA Civ 955 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A3/2002/1128 |
| Date | 10 July 2002 |
[2002] EWCA Civ 955
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM
THE HIGH COURT OF JUSTICE
CHANCERY DIVISION (The Vice-Chancellor)
Royal Courts of Justice
Strand,
London, WC2A 2LL
The Lord Chief Justice of England & Wales and
Lord Justice Waller and
Lord Justice Robert Walker
Case No: A3/2002/1128
Mr Philip Sales and Mr Ben Hooper
(instructed by Treasury Solicitor) for the appellant
Mr Gabriel Moss QC and Mr Stephen Atherton
(instructed by Slaughter and May) for the respondents
Lord Woolf CJ:
INTRODUCTION
This is an appeal by Thomas Winsor, the Rail Regulator, against the decision of the Vice-Chancellor of the 21 May 2002. The respondents are the joint Special Railway Administrators ("the Railway Administrators") of Railtrack Plc ("Railtrack") which is in railway administration.
The Rail Regulator commenced these proceedings against the Railway Administrators to obtain a declaration that section 11(3)(d) of the Insolvency Act 1986 ("the 1986 Act"), as it applies to companies in railway administration by virtue of section 59(3) and schedule 6 of the Railways Act 1993 ("the 1993 Act"), does not cover the determination by the Rail Regulator of an application made under section 17 of the 1993 Act. The Vice-Chancellor decided that section 11(3)(d) of the 1986 Act did cover determinations of applications made under section 17 of the 1993 Act. He therefore made a declaration which, while otherwise in the terms which were sought by the Rail Regulator, omitted the critical word "not".
THE LEGISLATION
Section 17 of the 1993 Act enables the Rail Regulator to direct Railtrack, and other "facility owners", to enter into an access contract granting permission to another party to use part of the track of the railways for the purposes of operating trains. For this purpose the Rail Regulator has to follow a set procedure and come to a determination before making a direction. It is this procedure and determination that is argued to be subject to section 11(3)(d) of the 1986 Act.
In order to determine whether this argument is correct, it is helpful to start with the terms of section 11(3) of the 1986 Act as it applies to companies in railway administration. The terms of section 11(3) of the 1986 Act as modified by section 59(3) and schedule 6 of the 1993 Act are as follows:
"(3) During the period for which an administration order is in force—
(a) no resolution may be passed or order made for the winding up of the company;
(b) no administrative receiver of the company may be appointed;
(c) no other steps may be taken to enforce any security over the company's property, or to repossess goods in the company's possession under any hire-purchase agreement, except with the consent of the administrator or the leave of the court and subject (where the court gives leave) to such terms as the court may impose; and
(d) no other proceedings (reference to which shall include a reference to any proceedings under or for the purposes of sections 55 or 57A of the Railways Act 1993) and no execution or other legal process may be commenced or continued, and no distress may be levied, against the company or its property except with the consent of the administrator or the leave of the court and subject (where the court gives leave) to such terms as aforesaid." (Emphasis added.)
OTHER PROCEEDINGS
In his judgment in Bristol Airport plc v Powdrille [1990] Ch 744 at p. 765, Sir Nicolas Browne-Wilkinson V-C (in a different context involving section 88 of the Civil Aviation Act 1982) considered the proper approach to the meaning of the critical phrase "other proceedings" in section 11(3)(d). He said at:
"In my judgment the natural meaning of the words "no other proceedings ….. may be commenced or continued" is that the proceedings in question are either legal proceedings or quasi-legal proceedings such as arbitration. It is true that the word "proceedings" can, in certain contexts, refer to actions other than legal proceedings, e.g. proceedings of a meeting….
Further, the reference to the "commencement" and "continuation" of proceedings indicates that what Parliament had in mind was legal proceedings. The use of the word "proceedings" in the plural together with the words "commence" and "continue" are far more appropriate to legal proceedings (which are normally so described) than to the doing of some act of a more general nature. Again, it is clear that the draftsman when he wished to refer to some activity other than "proceedings" was well aware of the word "steps" which he used in section 11(3)(c).
The judge took the view that the words "other proceedings" covered:
"Every sort of step against the company, its contracts or its property, which may be taken, and the intention of Parliament by sec. 11 is to prevent all such, without the leave of the court or the consent of the Railway Administrators."
In my judgment, however anxious one may be not to thwart the statutory purpose of an administration, the judge's formulation must not be too wide. If the word "proceedings" has this wide meaning, all the other detailed prohibitions in section 11(3) would be unnecessary. Moreover such a construction would introduce great uncertainty as to what constituted commencement or continuation of proceedings…. In my judgment, the judge's view would produce an undesirable uncertainty which, in view of my construction of sec. 11(3)(c), it is unnecessary to introduce into the Act."
Before this court, both Mr Philip Sales on behalf of the Rail Regulator and Mr Gabriel Moss QC for the Railway Administrators agreed that this Court was bound to follow the approach of Sir Nicolas Browne-Wilkinson and that, in particular, "no other proceedings" for present purposes is to be treated as applying to proceedings which are "either legal proceedings or quasi-legal proceedings such as arbitration"
It is also relevant to refer to In Re Rhondda Waste Disposal Ltd [2001] Ch. 57 in which this Court considered whether section 11(3)(d) of the 1986 Act applied to a criminal prosecution. The Court decided that the section did apply to a criminal prosecution. Scott Baker J with whom Henry and Robert Walker LJ agreed said:
"Having concluded that ejusdem generis has no place in the construction of these sections I turn to the natural meaning of the words. It seems to me that they have a plain and clear meaning. The words: "No other proceedings and no execution or other legal process may be commenced or continued….. against the company or its property" cover on their face all judicial and quasi judicial proceedings. There is no qualification to "other proceedings". The sections do not say "no other civil proceedings"; nor is there any reference to excluding any particular category of proceedings, eg criminal proceedings. The words used are entirely apt, submits Mr. Davies for the company, to include all judicial proceedings. There are other sections in the 1986 Act that specify offences by a company, eg. section 30. It is to be inferred that the draftsman intended that proceedings for such offences should fall under the umbrella of "other proceedings" in sections 10 and 11, otherwise they would have been expressly excluded."
It has also been decided that the restrictions on proceedings contained in section 11(3)(d) apply to proceedings before an industrial tribunal ( Carr v British International Helicopters Ltd [1994] 2 BCLC 474) and the adjudication process referred to in section 108 of the Housing Grants, Construction and Regeneration Act 1996 ( A.Straume (UK) Ltd v Bradlor Developments Ltd [2000] BCC 333). It is not, however, necessary to examine those authorities in detail having regard to the agreement between the parties as to the correctness of the approach of Sir Nicolas Browne-Wilkinson. It is sufficient to note that section 11(3)(d) applies to a wide category of legal or quasi-legal proceedings. None the less I emphasise that the other proceedings have to be "against" the company or its property.
Mr Moss at one time appeared to be submitting that, on his argument, it was only to part of the proceedings or the actual determination to which section 11(3)(d) applied. To cover this possible submission the issue can be rephrased to ask whether any part of the process which results in a determination under section 17 and any direction which results from a determination that a direction should be given to Railtrack constitutes legal or quasi-proceedings as that phrase was used by Sir Nicolas Browne-Wilkinson in the Bristol Airport case.
THE RAILWAY ADMINISTRATION ORDER
It is also necessary to have in mind the nature and purpose of a Railway Administration Order. Section 59 of the 1993 Act as subsequently amended by the Transport Act 2000 states:
"Railway administration orders, winding up and insolvency
59. (1) A "railway administration order" is an order of the court made in accordance with section 60, 61 or 62 below in relation to a protected railway company and directing that, during the period for which the order is in force, the affairs, business and property of the company shall be managed, by a person appointed by the court,—
(a) for the achievement of the purposes of such an order; and
(b) in a manner which protects the respective interests of the members and creditors of the company.
(2) The purposes of a railway administration order made in relation to any company shall be—
(a) the transfer to another company, or (as respects different parts of its undertaking) to two or more different companies, as a going concern, of so much of the...
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