![]() |
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback] [DONATE] | |||||||||
England and Wales High Court (Chancery Division) Decisions |
||||||||||
PLEASE SUPPORT BAILII & FREE ACCESS TO LAW
To maintain its current level of service, BAILII urgently needs the support of its users.
Since you use the site, please consider making a donation to celebrate BAILII's 25 years of providing free access to law. No contribution is too small. If every visitor this month gives just £5, it will have a significant impact on BAILII's ability to continue providing this vital service.
Thank you for your support! | ||||||||||
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> East-West Logistics LLP v Melars Group Ltd [2020] EWHC 2090 (Ch) (28 July 2020) URL: https://www.bailii.org/ew/cases/EWHC/Ch/2020/2090.html Cite as: [2020] EWHC 2090 (Ch) |
[New search]
[Context]
[View without highlighting]
[Printable PDF version]
[Help]
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES LIST
IN THE MATTER OF MELARS GROUP LIMITED
AND IN THE MATTER OF THE INSOLVENCY ACT 1986
Rolls Building Fetter Lane London EC4A 1NL |
||
B e f o r e :
____________________
![]() ![]() ![]() ![]() ![]() | Petitioner |
|
- and - |
||
MELARS GROUP LIMITED |
Respondent |
____________________
Mr Reuben Comiskey (instructed by Mackrell Solicitors) for the Respondent
Hearing date: 16 July 2020
____________________
Crown Copyright ©
Deputy ICC Judge Baister:
The petition and the evidence
The background
The law
"'[J]udgment opening insolvency proceedings' includes […] the decision of any court to open insolvency proceedings or to confirm the opening of such proceedings."
For the purpose of "opening insolvency proceedings" a judgment must bring about "the partial or total divestment of a debtor and the appointment of a liquidator" (see paragraph 3 of the ruling in In re Eurofood IFSC Ltd [2006] Ch 508). No judgment given in these proceedings to date can be so described. It follows, then, that the court is concerned now with the recast EU Regulation rather than the predecessor EC Regulation.
"The courts of the Member State within the territory of which the centre of the debtor's main interests is situated shall have jurisdiction to open insolvency proceedings ('main insolvency proceedings'). The centre of main interests shall be the place where the debtor conducts the administration of its interests on a regular basis and which is ascertainable by third parties.
In the case of a company or legal person, the place of the registered office shall be presumed to be the centre of its main interests in the absence of proof to the contrary. That presumption shall only apply if the registered office has not been moved to another Member State within the 3-month period prior to the request for the opening of insolvency proceedings."
"(27) Before opening insolvency proceedings, the competent court should examine of its own motion whether the centre of the debtor's main interests or the debtor's establishment is actually located within its jurisdiction.
(28) When determining whether the centre of the debtor's main interests is ascertainable by third parties, special consideration should be given to the creditors and to their perception as to where a debtor conducts the administration of its interests. This may require, in the event of a shift of centre of main interests, informing creditors of the new location from which the debtor is carrying out its activities in due course, for example by drawing attention to a change of address in commercial correspondence, or by making the new location public through other appropriate means.
(29) This regulation should contain a number of safeguards aimed at preventing fraudulent or abusive forum shopping.
(30) Accordingly, the presumptions that the registered office, the principal place of business and the habitual residence are the centre of main interests should be rebuttable, and the relevant court of the Member State should carefully assess whether the centre of main interests is genuinely located in that Member State. In the case of a company, it should be possible to rebut this presumption where the company's central administration is located in a Member State other than that of its registered office, and where a comprehensive assessment of all relevant factors establishes in a manner that is ascertainable to third parties, that the company's actual centre of management and supervision and the management of its interests is located in that other Member State. […]
(31) With the same objective of preventing fraudulent or abusive forum shopping, the presumption that the centre of main interests is at the place of the registered office, at the individual's principal place of business or at the individual's habitual residence should not apply where, respectively, in the case of a company, legal person or individual exercising an independent business or professional activity, the debtor has relocated its registered office or principal place of business to another Member State within the 3-month period prior to the request for opening insolvency proceedings, or, in the case of an individual not exercising an independent business or professional activity, the debtor has relocated his habitual residence to another Member State within the 6-month period prior to the request for opening insolvency proceedings.
(32) In all cases, where the circumstances of the matter give rise to doubts about the court's jurisdiction, the court should require the debtor to submit additional evidence to support its assertions and, where the law applicable to the insolvency proceedings so allows, give the debtor's creditors the opportunity to present their views on the question of jurisdiction.
(33) In the event that the court seised of the request to open insolvency proceedings finds that the centre of main interests is not located on its territory, it should not open main insolvency proceedings".
"43. With regard in particular to the term 'the centre of a debtor's main interests' within the meaning of art. 3(1) of the Regulation, the court held, at [31] of Eurofood IFSC […], that that concept is peculiar to the Regulation, thus having an autonomous meaning, and must therefore be interpreted in a uniform way, independently of national legislation.
[…]
48. As the Advocate General observed at [69] of her opinion, the presumption in the second sentence of art. 3(1) of the Regulation that the place of the company's registered office is the centre of its main interests and the reference in recital (13) in the preamble to the Regulation to the place where the debtor conducts the administration of his interests reflect the European Union legislature's intention to attach greater importance to the place in which the company has its central administration as the criterion for jurisdiction.
[…]
50. It follows that, where the bodies responsible for the management and supervision of a company are in the same place as its registered office and the management decisions of the company are taken, in a manner that is ascertainable by third parties, in that place, the presumption in the second sentence of art. 3(1) of the Regulation that the centre of the company's main interests is located in that place is wholly applicable. In such a case, as the Advocate General observed at [69] of her opinion, it is not possible that the centre of the debtor company's main interests is located elsewhere.
51. The presumption in the second sentence of art. 3(1) of the Regulation may be rebutted, however, where, from the viewpoint of third parties, the place in which a company's central administration is located is not the same as that of its registered office. As the court held at [34] of Eurofood IFSC, the simple presumption laid down by the EU legislature in favour of the registered office of that company can be rebutted if factors which are both objective and ascertainable by third parties enable it to be established that an actual situation exists which is different from that which locating it at that registered office is deemed to reflect.
52. The factors to be taken into account include, in particular, all the places in which the debtor company pursues economic activities and all those in which it holds assets, in so far as those places are ascertainable by third parties. As the Advocate General observed at [70] of her opinion, those factors must be assessed in a comprehensive manner, account being taken of the individual circumstances of each particular case.
53. In that context, the location, in a Member State other than that in which the registered office is situated, of immovable property owned by the debtor company, in respect of which the company has concluded lease agreements, and the existence in that Member State of a contract concluded with a financial institution—circumstances referred to by the referring court—may be regarded as objective factors and, in the light of the fact that they are likely to be matters in the public domain, as factors that are ascertainable by third parties. The fact nevertheless remains that the presence of company assets and the existence of contracts for the financial exploitation of those assets in a Member State other than that in which the registered office is situated cannot be regarded as sufficient factors to rebut the presumption laid down by the EU legislature unless a comprehensive assessment of all the relevant factors makes it possible to establish, in a manner that is ascertainable by third parties, that the company's actual centre of management and supervision and of the management of its interests is located in that other Member State.
[…]
55. The court has held that, where the centre of a debtor's main interests is transferred after the lodging of a request to open insolvency proceedings, but before the proceedings are opened, the courts of the Member State within the territory of which the centre of main interests was situated at the time when the request was lodged retain jurisdiction to rule on those proceedings (Staubitz-Schreiber (Case C-1/04) [2006] ECR I-701; [2006] BCC 639, at [29]). It must be inferred from this that, in principle, it is the location of the debtor's main centre of interests at the date on which the request to open insolvency proceedings was lodged that is relevant for the purpose of determining the court having jurisdiction".
Whilst they do no more in parts than repeat what is to be found in the Regulation itself, they make good the propositions summarised in Mr Knight's skeleton argument (paragraph 21):
(a) COMI is to be given an autonomous meaning and interpreted in a uniform manner across member states;
(b) COMI must be determined by attaching greater importance to the place of a company's central administration, as may be established by objective factors ascertainable by third parties;
(c) Where the bodies responsible for management and supervision of a company were in the same place as its registered office and the management decisions of the company were taken, in a manner ascertainable by third parties, in that place, the presumption could not be rebutted; and
(d) Where the company's central administration was not in the same place as its registered office, the presence of company assets and the existence of contracts for the financial exploitation of those assets in a Member State other than that in which the registered office is situated is not sufficient to rebut the presumption unless a comprehensive assessment of all relevant factors made it possible to establish, in a manner ascertainable by third parties, that the actual centre of management and supervision was located in the other Member State.
"34. It follows that, in determining the centre of main interests of a debtor company, the simple presumption laid down by the Community legislature in favour of the registered office of the company can be rebutted only if factors which are both objective and ascertainable by third parties enable it to be established that an actual situation exists which is different from that which locating it at the registered office is deemed to reflect.
35. That could be so in particular in the case of a 'letterbox' company not carrying out any business in the territory of the Member State where its registered office is situated.
36. By contrast, where a company carries on business in the territory of the Member State where its registered office is situated, the mere fact that its economic choices are or can be controlled by the parent company in another member state is not enough to rebut the presumption laid down by the Regulation."
"7. [The Advocate General] then quoted ([113]) the further submission that,
'… the 'ascertainability by third parties' of the centre of main interests is not central to the concept of the 'centre of main interests'. That can be seen from recital (13) [of the preamble] itself which states that the 'centre of main interests' 'should correspond to the place where the debtor conducts the administration of his interests on a regular basis', in other words, in the case of a corporation, where its head office functions are exercised. Recital (13) continues, 'and [which] is therefore ascertainable by third parties', in other words, it is because the corporation's head office functions are exercised in a particular Member State that the centre of main interests is ascertainable there.'
The Advocate General again ([114]) agreed with that submission."
Lewison J's attention to what the Advocate General said about ascertainability is of note.
(a) An individual (and presumably a company too) is free to change his or its centre of main interests, even for a self-serving purpose.
(b) If a debtor shifts his centre of main interests in the face of possible insolvency, the court must scrutinise the facts and determine whether the change is one of substance or illusory.
(c) Regard must be had to the need for the centre of main interests to be ascertainable by third parties, in particular creditors and potential creditors.
(d) Whilst the date on which a debtor's centre of main interests is to be established is the date of presentation of the petition, evidence as to a debtor's activities and actions at other times may be significant to the extent that they cast light on the truth or otherwise of any claim to have had a centre of main interests in a particular location at the relevant time.
(e) A change of centre of main interests must have an element of permanence.
"[28] Considering the matter overall, there are a number of jurisdictions with which the operation of these companies is linked. This is unsurprising given the international nature of their business. The legislation makes it clear that the presumption is that the COMI of the company will be the State of its registered office which, in this case, is Cyprus. The burden is on the Applicant to establish a different COMI and that will involve a comprehensive review of all the facts with a particular focus on objective matters and matters ascertainable by third parties."
The second is Irish Bank Resolution Corporation Limited v Quinn [2012] NICh 1 to which I shall come later.
The submissions
Conclusions
"[51] I find that Mr Quinn's main interests in recent months were the litigation [in] which he and his family are embroiled and the salvaging of what he can from the situation in which he finds himself. I find the centre of Mr Quinn's main interests is in the Republic of Ireland. I find that prior to 10 November 2011 he was not conducting the administration of his interests on a regular basis in Northern Ireland. I find that the probability is that the administration of his interests was shared between his home, Belturbet and Dublin where he continues to have professional advisors."
"[A] debtor does not appear to be obliged to advertise his centre of main interest but nor may he hide it. It should be reasonably or sufficiently ascertainable or ascertainable by a reasonably diligent creditor" (paragraph 28).
Whilst the fact of the company's registered office being in Malta was and remains, as Mr Comiskey rightly says, ascertainable from public records, the fact that its centre of main interests was and remains in the UK was and still is similarly ascertainable, albeit less readily, by one reasonably diligent creditor and could be by others.