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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> MF Global UK Ltd, Re [2015] EWHC 2319 (Ch) (31 July 2015) URL: https://www.bailii.org/ew/cases/EWHC/Ch/2015/2319.html Cite as: [2015] WLR(D) 350, [2016] Ch 325, [2016] ILPr 15, [2015] BCC 891, [2016] 2 WLR 588, [2015] EWHC 2319 (Ch), [2015] BPIR 1208 |
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CHANCERY DIVISION
COMPANIES COURT
Rolls Building London, EC4A 1NL |
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B e f o r e :
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IN THE MATTER OF  MF GLOBAL UK LIMITED (IN SPECIAL ADMINISTRATION)AND IN THE MATTER OF THE INVESTMENT BANK SPECIAL ADMINISTRATION REGULATIONS 2011RICHARD FLEMING, RICHARD HEIS AND MICHAEL PINK (ACTING AS JOINT SPECIAL ADMINISTRATORS OF MF GLOBAL UK LIMITED) |
Applicants |
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| - and - |
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| (1) LCH.CLEARNET LIMITED (2) LCH.CLEARNET SA |
Respondents |
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Gabriel Moss QC (instructed by Freshfields Bruckhaus Deringer) for the Respondents
Hearing dates: 12, 13, and 14 May 2015
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Crown Copyright ©
Mr Justice David Richards:
MF Global UK Limited (MF Global) apply for an order under section 236 of the Insolvency Act 1986 against LCH.Clearnet Limited (LCH UK) and LCH.Clearnet SA (LCH France). The order seeks the production of documents and a full description by way of witness statement of the sales or auction processes by which the respondents closed out MF Global's open positions with the respondents very shortly after the appointment of the administrators.
respondents oppose the making of the order. LCH France submits that the court has no jurisdiction to make an order against it under section 236. Both LCH UK and LCH France, if there is jurisdiction to make an order against it, submit that the court should not exercise its discretion to make the order sought.
request to the French court under Council Regulation (EC) No.1206/2001 of 28 May 2001 (the Evidence Regulation) to examine a responsible officer of LCH France in compliance with sections 236 and 237(3) and to receive from the responsible officer copies of all existing documents that can be located following a reasonable and proportionate search, the extent of which is to be determined by the English court if not agreed between the parties, and setting out the information requested in the schedule to the proposed order. LCH France resists this alternative order and submits that, in the circumstances of this case, a request cannot be made under the Evidence Regulation.
MF Global was a member of the MF Global group of companies which carried on business as broker-dealers in financial markets throughout the world. The group's principal operations were in New York and London, the latter being carried on by MF Global. MF Global and other companies in the group entered formal insolvency proceedings in the United States and England on 31 October 2011. The administrators of MF Global were appointed under the Investment Bank Special Administration Regulations 2011. Under the terms of those Regulations, sections 236 and 237 of the Insolvency Act (apart from section 236(1)) apply in the special administration of MF Global.
respondents operate clearing houses in securities and other financial instruments in a number of jurisdictions, including England and France. As with other clearing houses, the system operates on the basis that the relevant respondent is interposed as a principal party to trades in securities or other financial instruments. Accordingly, a sale of securities from A to B becomes a contract for the sale of the securities from A to the clearing house and a back-to-back contract for the sale of those securities from the clearing house to B. The purpose of a clearing house is to reduce and allocate the inherent risks arising from transactions between market participants. They protect their members from the potential losses that would otherwise result from the default of a clearing member and they provide protection to the market from systemic risk. The respondents, like all clearing houses, have rules, arrangements and resources to ensure that they can respond in an orderly and efficient way to defaults by members. They are entitled to close out the open positions of defaulting members and they can use netting procedures to set-off amounts that would otherwise arise from non-cleared trades.
MF Global went into administration on 31 October 2011, it had a number of very large open positions with the respondents, in particular with LCH France, involving European sovereign debt. The contracts were repurchase to maturity contracts whereby MF Global sold bonds to a counter-party for a cash payment on day 1 and agreed to repurchase the same quantity of bonds for a specified amount on a specified future date, typically a few days before the bonds matured. These contracts were cleared through one or other of the respondents, with the result that MF Global sold the bonds and received the initial payment from the relevant respondent which in turn sold the same bonds and received the same amount from the original counter-party. The relevant respondent remained liable to the counter-party to repurchase the bonds on the specified future date and had back-to-back contracts with MF Global. The open positions taken by MF Global were very large, including 2.8 billion of Italian government debt and 1.49 billion of Spanish government debt cleared through LCH France. Other European government debt positions were also held with both LCH UK and LCH France.
regarding the debts of certain states in the Eurozone, in particular Greece but involving other states as well. Italy's sovereign debt rating was downgraded by Standard & Poor's from A+ to A- on 19 September 2011 and by Fitch Ratings from AA- to A+ on 7 October 2011. At much the same time the sovereign debt rating of Spain was downgraded by the rating agencies. On Thursday 27 October 2011, Eurozone states agreed a plan to resolve the European sovereign debt crisis, including a proposal that holders of Greek sovereign debt should cut the value of their holdings by 50%. On Monday 31 October 2011, the day on which MF Global entered administration, the Greek government issued a statement, calling for a referendum on the Eurozone proposal and suggesting that Greece might leave the euro.
MF Global constituted an event of default under the rules governing its contracts with the respondents. The respondents exercised their rights to close-out MF Global's open position. Losses against the repo prices totalling approximately 422 million were suffered on those close-outs, which were deducted from the margin held by the respondents. In particular, losses of approximately 127.3 million were suffered on the close-out of MF Global's position in Italian sovereign debt.
result in significant losses but they are concerned that, when compared with contemporary prices quoted on Bloomberg screens, the losses were exceptionally large. The administrators have calculated that if all the open positions had been closed at or around the prices quoted by Bloomberg, on the relevant termination dates, the discount suffered would have been 241 million, as opposed to 422 million. In particular, losses of 127.3 million arose on the sale on 2 November 2011 of 2.2 billion of Italian Government bonds at 5.83 points below the corresponding Bloomberg price and 5.51 points below the price obtained by the respondents for the residual 625 million of the position sold via an auction the next day. The administrators state in their evidence that it is not clear to them why there were such significant differences between the Bloomberg price and the close-out prices or why the prices fluctuated so much between the various close-outs.
relating to these close-outs. Mr Richard Heis, one of the joint administrators, explains the reasons for the present application in paragraphs 10 and 13 of one of his witness statements in support of the application:
"10. In light of the scale of the losses described above, and the discrepancies between the prices obtained for the bonds, the JSAs are concerned to establish whether the LCH Entities conducted the close outs in a manner consistent with their duties under the appropriate laws and
13. If there is evidence to suggest that the LCH Entities did not close out the RTMs in accordance with their duty of care, then it is incumbent upon the JSAs to seek
"6.2 at present, however, all that concerns the JSAs is to understand the option process in order to determine whether there is any claim that should be brought. In that context, the variance from Bloomberg pricing
respondents provide to the administrators' solicitors:
"a witness statement from the appropriate person on behalf of each
relating to it", including a range of information specified in 5 sub-paragraphs. Further paragraphs of the schedule specified internal communications within the respondents and external communications between the respondents and any actual or potential bidders and others between 24 October 2011 and 31 December 2011. The schedule also sought all tapes recording telephone conversations between 24 October 2011 and 31 December 2011 between the respondents and any actual or potential bidder or any other party regarding the close out of the open positions.
respondents' solicitors copies of the orders that would be sought at the hearing. Two draft orders were provided, dealing separately with LCH UK and LCH France. In the draft order relating to LCH France, a new order was included as an alternative to the order already sought. The new alternative order was in the following terms:
"The English Court hereby
relation to Italian government debt on 3 November 2011 differed only to a small extent from the Bloomberg prices on that day. In the course of her submissions on the first day of the hearing, Ms Toube was able to confirm that this was indeed the prime focus of the administrators' attention. After the hearing on that day, the administrators' solicitors wrote to the respondents' solicitors, stating that in the interests of narrowing the issues before the court, the administrators were content to limit the information requested in the application to the sale of 2.2 billion of Italian government bonds and two tranches of Spanish government bonds, all of which occurred on 2 November 2011.
"Close Out Rules and procedures
The LCH rule books and any other written rule, policies, procedures, notifications or member instructions in effect during October 2011 insofar as they
Specific process used to close out
A full description (by way of witness statement) of the sale and/or auction processes that occurred between 1 and 3 November 2011 (inclusive) in
(a) a list of parties contacted as part of the sale process, the positions they were contacted in
(b) an explanation of how parties were chosen to bid on positions and by whom at LCH they were chosen;
(c) an explanation of how bids were obtained and
(d) a list of parties who bid for and/or purchased the bonds (i.e. identification of counterparty A, B, C, etc);
(e) information
Copies of all bid sheets sent out to market participants in
All written communications between LCH and any actual or potential bidder, member or other party
All LCH communications made between 1 November 2011 and 3 November 2011 (inclusive)
All tapes
Other
A list of participants and transcript from the LCH Clearnet market wide conference call on 1 November 2011 and any similar calls in which the close out, sale or auction of the Bonds was discussed."
respondents had estimated the total cost of retrieving the documents and tapes sought at approximately £135,000 and the cost of legal review of the documents and tapes at between approximately £3.13 million and £4.625 million. Not surprisingly, the administrators challenged these figures, although I think it likely that substantial costs would be incurred in the retrieval and necessary review of the documents and tapes sought. The late reduction in the scope of the order sought did not leave time for the respondents to prepare new calculations of the likely costs. In any event, the administrators have offered, as a condition of orders if made, that they will bear the reasonable costs of compliance with those orders to be assessed on an indemnity basis.
relevant, provide as follows:
"236. Inquiry into company's dealings, etc.
(2) The court may, on the application of the office-holder, summon to appear before it
(a) any officer of the company,
(b) any person known or suspected to have in his possession any property of the company or supposed to be indebted to the company, or
(c) any person whom the court thinks capable of giving information concerning the promotion, formation, business, dealings, affairs or property of the company.
(3) The court may
(3A) An account submitted to the court under subsection (3) must be contained in
(a) a witness statement verified by a statement of truth (in England and Wales), and
(b) an affidavit (in Scotland).
(4) The following applies in a case where
(a) a person without
(b) there are
(5) The court may, for the purpose of bringing that person and anything in his possession before the court, cause a warrant to be issued to a constable or prescribed officer of the court
(a) for the arrest of that person, and
(b) for the seizure of any books, papers,
(6) The court may authorise a person arrested under such a warrant to be kept in custody, and anything seized under such a warrant to be held, in accordance with the rules, until that person is brought before the court under the warrant or until such other time as the court may order.
237 Court's enforcement powers under s. 236.
...
(3) The court may, if it thinks fit, order that any person who if within the jurisdiction of the court would be liable to be summoned to appear before it under section 236 or this section shall be examined in any part of the United Kingdom where he may for the time being be, or in a place outside the United Kingdom.
(4) Any person who appears or is brought before the court under section 236 or this section may be examined on oath, either orally or (except in Scotland) by interrogatories, concerning the company or the matters mentioned in section 236(2)(c)."
Provisions to similar effect apply in bankruptcy: see sections 366 and 367.
MF Global and LCH France and they were all closed out by LCH France. The order now sought against LCH France therefore relates to the closing out by it of those transactions, while the order sought against LCH UK seeks information and documents in its possession or under its control relating to the actions not of it but of LCH France.
relies primarily on the decision of the Court of Appeal in Re Tucker [1980] Ch 148, a decision on section 25 of the Bankruptcy Act 1914 which, as applied to bankruptcy, was in substantially the same terms as sections 236 and 237. In particular, section 25(6), re-enacted as section 237(3), provided:
"The court may, if it thinks fit, order that any person who if in England would be liable to be brought before it under this section shall be examined in Scotland or Ireland, or in any other place out of England."
Re Tucker, the respondent, who the court agreed was capable of giving relevant information concerning the debtor, his dealings or property, was resident in Belgium. The Court of Appeal held that no order under section 25 could be made against him. Dillon LJ, giving the lead judgment, referred at p.158 to the rule of construction that, unless the contrary is expressly enacted or plainly implied, United Kingdom legislation is applicable only to British subjects or to others who by coming to the United Kingdom, whether for a short or a long time, have made themselves subject to British jurisdiction. Dillon LJ continued:
"I look, therefore, to see what section 25(1) is about, and I see that it is about summoning people to appear before an English court to be examined on oath and to produce documents. I note that the general practice in international law is that the courts of a country only have power to summon before them persons who accept service or are present within the territory of that country when served with the appropriate process. There are exceptions under R.S.C., Ord 11, but even under those rules no general power has been conferred to serve process on British subjects
I then find that an alternative procedure is provided by orders in aid under section 122 which could be used to secure the examination of persons
Finally, and to my mind conclusively, by section 25(6) the court is given a power (the scope of which will have to be considered on the
re-enacted in substantially the same terms, it is a principle of construction that the re-enactment is intended to carry the same meaning as its predecessor. No doubt the principle could be displaced, for example, if new provisions in the new legislation showed that the re-enacted provision was intended to have a different meaning. The principle is particularly in point if the earlier provision has been the subject of authoritative decision. In such circumstances, it is presumed that, if substantially the same words are used in the new provision, Parliament did not intend to change the meaning as held by the court. Re Tucker is clearly an authoritative decision on the lack of extra-territorial effect of section 25 of the Bankruptcy Act 1914 and, although it was decided after the enactment of the Insolvency Act 1986, it is a binding interpretation of section 25 which will apply equally to the successor sections in the Insolvency Act 1986, unless the context of the new legislation shows that the meaning must be taken to have changed.
Re Tucker is not a binding authority on the effect of section 25, either because it was decided per incuriam or because the reasoning of Dillon LJ suffers from the logical fallacy of contraposition. I am unable to accept either of these bold submissions. The submission that the decision was per incuriam is based on a detailed trawl through the Bankruptcy Acts of the 19th century which was not presented in argument to the Court of Appeal in Re Tucker. In particular, Ms Toube relied on section 215 of the Bankruptcy Act 1861 which incorporated section 1 of an Act of 1854 as showing that the English court had power to order the private examination in England of a person in Scotland or Ireland and that such power would not have been lost by the legislative changes leading up to the Bankruptcy Act 1914. The submission founders for a number of reasons, but the principal reason is that section 1 of the 1854 Act was concerned with requiring the personal attendance of witnesses at a trial. It was not concerned with private examinations. Quite apart from the difficulty of a judge at first instance concluding that a decision of the Court of Appeal was reached per incuriam, the analysis is in any event in my judgment wrong. Still less would it be appropriate or even permissible for a judge at first instance to conclude that a decision of the Court of Appeal was wrong on grounds of illogicality. In any event, I consider that the submission is misconceived. The position taken by Dillon LJ, and endorsed by Lord Mance in a case to which I later refer, involves a logical approach to the construction of the words of section 25(6) of the Bankruptcy Act 1914.
reference in section 237(3) to "any person who if within the jurisdiction of the court would be liable to be summoned to appear before it under section 236" referred not to the physical location of the person but to whether that person fell within the jurisdiction conferred by section 236. This submission, advanced for the first time in reply, is in my judgment plainly wrong. The phrase "within the jurisdiction of the court" is the commonly used expression to describe presence within the territorial jurisdiction of the court and is no more than an elaborate way of saying "in England" (and Wales), the phrase used in section 25(6) of the Bankruptcy Act 1914.
relies on authorities on other sections of the Insolvency Act 1986 which have been held to have extra-territorial effect.
Re Seagull Manufacturing Co Ltd [1993] Ch 345, the Court of Appeal affirming the decision of Mummery J reported at [1992] Ch 128, held that the provision for the public examination of directors and others under section 133, which was a new provision in the 1986 Act, had extra-territorial effect. In reaching this decision, the decision in Re Tucker was considered without any suggestion that it was wrong. The conclusion that the provisions for private examination did not have extra-territorial effect was distinguished on the grounds that the persons who could be the subject of a public examination under section 133 were more narrowly confined, being limited to officers of the company and persons who have been concerned or taken part in its promotion, formation or management, whereas under section 236(2)(c) an order for private examination can be made against any person whom the court thinks capable of giving information concerning the promotion, formation, business, dealings, affairs or property of the company. Secondly, while section 25(6) which Dillon LJ considered to be conclusive was re-enacted in section 237(3), no similar provision applies in relation to section 133.
Recently, in Jetivia SA v Bilta [2015] UKSC 23, [2015] 2 WLR 1168, the Supreme Court has held that section 213 of the Insolvency Act, providing remedies in respect of fraudulent trading, has extra territorial effect. Lord Sumption at [108] referred generally to provisions contained in United Kingdom and foreign insolvency legislation empowering the court to set aside transactions made before the commencement of the liquidation and to require those responsible to make good the loss and continued:
"In the case of a company trading internationally, it is difficult to see how such provisions can achieve their object if their effect is confined to the United Kingdom."
To similar effect are statements made by Lord Toulson and Lord Hodge in their joint judgment at [213]-[214].
Re Paramount Airways Ltd [1993] Ch 223, the Court of Appeal held that section 238 of the Insolvency Act, dealing with transactions at an undervalue, had extra territorial effect for similar reasons.
Re Tucker was discussed at some length in the lead judgment of Lord Mance at [19]-[24], without any suggestion that it was wrongly decided. At [23], Lord Mance drew attention to the significance of section 25(6) of the Bankruptcy Act 1914 which, as mentioned earlier, Dillon LJ had regarded as "conclusive".
reliance on it. They agree that it was based on the mistaken belief that the United States fell within the definition of a relevant country or territory for the purposes of section 426(5) of the Insolvency Act 1986.
reasonable bounds. But it is in my judgment impossible to overlook the authoritative standing of the decision in Re Tucker, the re-enactment of the earlier private examination provisions in substantially the same terms and the presence of what is now section 237(3). I conclude that section 236 does not have extra-territorial effect and that therefore an order cannot be made under it against LCH France. I should add that the parties are agreed that Council Regulations (EC) No.1346/2000 of 29 May 2000 on insolvency proceedings does not apply to the special administration of MF Global as it was an investment undertaking providing services involving the holding of funds or securities for third parties and is therefore excluded by Article 1.2.
Re Tucker that an order could be made under section 25(6) of the Bankruptcy Act 1914 against a person resident in a foreign state. However, before making any such order, the court will need to be satisfied that the case is covered by available procedural machinery by which the respondent could be compelled to comply with the order to produce documents or give evidence.
respect rely on any provisions of French domestic law but rely on the Evidence Regulation, to which reference is made in their proposed order. Article 1.1 provides:
"This
(a) the competent court of another Member State to take evidence; or
(b) to take evidence directly in another Member State."
Regulation extends to orders for the production of documents. She submits that a request can properly be made under the Regulation for the examination of a responsible officer of LCH France by the French court and the production to the French court of copies of all relevant documents.
respondents is correct in his submission that the proposed request is outside the scope of the Evidence Regulation.
Regulation provides:
"A
required by Article 4 to be stated in the request include the names and addresses of the parties to the proceedings and "the nature and subject matter of the case and a brief statement of the facts". The intended purpose and scope of the Regulation also appears from the recitals. In particular, recital (7) provides:
"As it is often essential for a decision in a civil or commercial matter pending before a court in a Member State to take evidence in another Member State, the Community's activity cannot be limited to the field of transmission of judicial and extrajudicial documents "
requisite of a request under the Evidence Regulation that the evidence is intended for use in judicial proceedings, commenced or contemplated, which will result in a decision. That requirement is not satisfied in the present case. The purpose of the request is not the production of information and documents for use in proceedings contemplated by the administrators. They make clear in their evidence that the purpose is to enable them to consider whether it would be appropriate to bring proceedings. Ms Toube's submission that the relevant proceedings were the administration proceedings is not in my view sustainable. For the purposes of the Regulation, the proceedings relevant to the request would be such proceedings, if any, as the administrators chose to instigate against LCH France.
Regulation contemplates requests being made by the court in which the relevant judicial proceedings will take place. It hardly seems likely that the Regulation contemplates a request by the English court to the French court for the provision of evidence for use in proceedings in the French court.
request for which provision is made in the draft order proposed under section 237(3) cannot be made under the Evidence Regulation and that therefore the court should decline to make the order sought.
Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the Judgments Regulation) applied, so that proceedings would have to be brought against LCH France in France.
Regulation provides that it applies "in civil and commercial matters whatever the nature of the court or tribunal". Article 1.2 provides that the regulation does not apply to "bankruptcy, proceedings relating to the winding-up of insolvent companies or other legal persons, judicial arrangements, compositions and analogous proceedings". The administration of an insolvent company, whether under schedule B1 to the Insolvency Act or under any special regime applying to particular types of company such as investment banks, is within the scope of this exception. Mr Moss submitted that as the application against LCH France was an application for disclosure of evidence to be used in subsequent non-insolvency litigation, it did not fall within the exception. The Court of Justice has held that the decisive criterion to be adopted is not the procedural context of which the action forms part but its legal basis. Does the basis of the action find its source in the common rules of civil and commercial law or in the rules specific to insolvency proceedings: see Nickel & Goeldner Spedition Gmbh v "Kintra" UAB (Case-157/13) [2015] QB 96. An action for the payment of a debt based on the provision of transport services was not within the exception for insolvency proceedings.
relation to companies, and the analogous powers conferred in relation to bankruptcy, are specific to insolvency proceedings. The application is not for the production of evidence for use in proceedings to be brought against LCH France but is for the production of information to enable the administrators, exercising their specific statutory functions as such, to investigate the circumstances of the close-out of MF Global's positions with a view to seeing whether there is a proper basis for a claim against LCH France.
reason of the non-applicability of the Evidence Regulation, the court should not make the alternative order sought against it under section 237(3).
relating to Italian and Spanish government bonds on 2 November 2011 all of which were carried out by LCH France, the application against LCH UK is for the production of documents and information relating to steps taken by LCH France, not LCH UK. The assumption is that LCH UK will or may have information relating not to its own business but to that of LCH France which is itself conducted in France, not England. I have earlier set out the extensive and detailed list of information, documents and tapes which are sought by the administrators. Whether or not LCH UK has any or any significant part of this information and documents is unknown, but Ms Toube pointed to the fact that the person who made the witness statements on behalf of the respondents is based in London and describes himself as the global head of fixed income at LCH UK, adding that his role includes responsibility for fixed income at LCH France. Equally, it should be noted that the administrators are not seeking an order under section 236 against that particular individual.
respect of the exercise by them of their contractual rights to close-out positions are severely limited. In the case of LCH UK it is not liable unless bad faith is shown. That is no longer directly relevant, now that the administrators are seeking information and documents relating only to close-outs undertaken by LCH France. I was taken to provisions of the documents which govern the relationship between LCH France and its clearing members including MF Global. Those provisions are governed by French law. Mr Moss submitted that there was a complete exclusion of liability in the case of closing out positions following an event of default, alternatively that any claim was limited to cases of "severe negligence or intentional omission or act". Ms Toube disputed that there was a complete exclusion of liability but accepted that the limitation of severe negligence or intentional omission or act applied. I cannot resolve the disputed issue of construction on this application, but on any footing MF Global would clearly have to establish at least a high level of culpability in any proceedings, whatever "severe negligence" precisely means as a matter of French law. If I had been able to accept Mr Moss' submission on the complete exclusion of liability, no purpose would have been served by an order under section 236 against LCH UK and I would have declined to make any order on that ground.
relevant positions in Italian and Spanish government bonds and to consider whether there are proper grounds for bringing proceedings against LCH France in that respect. It is clear from the authorities that that is a proper basis on which an order under section 236 can be made.
really comes down to two points. First, the prices at which the positions were closed out were materially lower than the prices appearing on the Bloomberg screens. Secondly, the price at which 2.2 billion of Italian government bonds were closed out on 2 November 2011 was materially less than the close-out price for the remaining 625 million of Italian government bonds the following day.
requires investigation. As Harman J said in Re Adlards Motor Group Holding Ltd [1990] BCLC 68 at 74:
"For the court to order a private examination, even at the instance of an officer of the court, it is necessary for the court to see that there is something that warrants being enquired into. On a summons for an order for private examination the court should not conduct, as counsel for the liquidator rightly submitted to me, a mini-trial and determine what the likely answer to the matter would be. On the other hand the court must see whether there is a case to be enquired into, a case for enquiry."
relatively small quantity of bonds gives no indication of the ability of the market to absorb a much larger quantity of bonds or the price at which market participants would be prepared to purchase those bonds. In my judgment, the resulting difference in price is simply not of itself sufficient to justify the far-reaching order for the production of information, documents and tape recordings sought by the administrators in this case. As to the difference between the prices achieved on the 2 November 2011 and those achieved on 3 November 2011, the evidence shows that at this point in the euro crisis, highly significant events were taking place on an almost hourly basis. The evidence sets out the course of events and it is not necessary to repeat it here. Dealing prices on one day are often not a good guide to dealing prices on another day and, having regard to the extraordinary events on those two days, I am satisfied that the differences in prices achieved for the Italian government bonds are not such as to warrant the making of the order sought under section 236.
resisted was that any proceedings against LCH France would be out of time. Article 1.3.6.2 of LCH France's Clearing Rule Book provides that any claim must be notified not more than 12 months "from the Clearing Day the Clearing Members become aware, or should have become aware using due diligence, of the occurrence of the harmful event". The harmful event was clearly the sale of the relevant bonds in November 2011. MF Global became aware of the close-outs of the positions on or shortly after the dates on which they took place. Notification of a claim was given in clear terms in July 2014, a significant time after the expiry of the relevant 12 month period. The administrators rely on a letter sent by their solicitors to the solicitors for the respondents dated 11 October 2012. The letter records certain confirmations given by the administrators and continues:
"For the avoidance of doubt, these confirmations do not constitute an admission that your clients have applied their rules correctly, in particular with
receipt of the skeleton argument of counsel for the respondents that this point would be taken. The point had in fact been canvassed in earlier correspondence and I think that the administrators had sufficient notice and opportunity to deal with a point which was clearly live between the parties. I would be surprised if the terms of the letter dated 11 October 2012 were sufficient to constitute the notification of a claim, and if I was entirely satisfied that it did not do so, I would have refused the application on the grounds that the order sought would serve no purpose, as any proceedings which might flow from the provision of information and documents would be bound to fail. In the circumstance, however, it is not a ground on which I refuse the application.
reasons given in this judgment, I refuse to make any of the orders sought and I dismiss the application.