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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> NMUL Realisations Ltd, Re [2021] EWHC 94 (Ch) (20 January 2021) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2021/94.html Cite as: [2021] EWHC 94 (Ch) |
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BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES LIST (ChD)
IN THE MATTER OF NMUL REALISATIONS LIMITED
AND IN THE MATTER OF THE INSOLVENCY ACT 1986
The Royal Courts of Justice 7 Rolls Building, Fetter Lane London EC4A 1NL |
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B e f o r e :
____________________
Lee Andrew Causer Danny Nicolaas William Dartnaill Ryan Kevin Grant (in their capacities as the joint administrators of NMUL Realisations Limited (in administration)) |
Applicants |
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- and |
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NMUL Realisations Limited (in administration) |
Respondent |
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The Respondent did not appear and was not represented.
Hearing date: 21 December 2020
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Crown Copyright ©
Deputy Insolvency and Companies Court Judge Frith:
Introduction
The Facts
" any property in which the Defendant has any interest or to which the Defendant has any right and any property held by any other person to whom the Defendant has made a gift caught by the Proceeds of Crime Act 2002, including but not limited to all property set or in the Schedules below."
There was only one asset specifically defined in the schedule to the ERO which provided as follows:
"1) The outstanding value of the loan under the original loan agreement plus interest owed to [Tudor] as the trustee of [MSIPP] by [the Company]. The whole amount should be attributed to both Peter Bradley and Andrew Meeson."
"I note from the enforcement receivership orders dated the 6th of September 2019 that the beneficial assets of [Tudor] and [MSIPP] are to be treated as the personal assets of Peter Bradley and Andrew Meeson. I also note that the schedules to those orders state that the benefit of the loan made by [Tudor] (as trustee of [MSIPP] to [the Company] shall be attributed to those two individuals."
Having come to that conclusion, the GLD was therefore satisfied that the beneficial assets of Tudor did not vest in the Crown as bona vacantia, but instead formed part of the realisable property of Messrs Meeson and Bradley. In fact, the claim of the Enforcement Receiver had been accepted by the Applicants prior to the receipt of this response and the sum claimed was paid on 20 November 2020. It follows that from the date of her appointment as the Enforcement Receiver, the beneficial interest in the MSIPP loan and the MSIPP debenture formed part of the realisable assets of Messrs Meeson and Bradley which could be realised by the Enforcement Receiver for the purpose of discharging the confiscation orders that had been made against them.
The status of the notice of satisfaction filed by the Company
"Section 859L makes provision for the filing of specified particulars and a statement to the effect that either the debt for which the charge has been given has been paid or satisfied in whole or in part or that all or part of the property or undertaking charged by the registered charge has been released from the charge or has ceased to form part of the company's property or undertaking. If such a statement and the relevant particulars are filed using Companies Form MR04 or MR05 respectively, section 859L (5) obliges the Registrar to include a statement of satisfaction or release as the case may be, in the Register."
"The Registrar may, on receipt of a verifying statement in the prescribed form, enter a memorandum of satisfaction or release. A memorandum of satisfaction records either the partial or complete payment of the charged debt. A memorandum of release records either the partial or complete release of the charged property or it ceasing to belong to the company, as the case may be. The Registrar's entry is not, however, conclusive since the statement delivered may be fraudulent. In this case those making it will be guilty of perjury but a subsequent charge relying on it will be postponed. Prospective chargees should therefore always seek evidence that prior chargees have released their security rather than rely upon searches at Companies House. Section 874 does not state who is entitled to apply for the memorandum and it should be amended to require the memorandum to be filed by the charge."
What are the consequences of a failure to give notice under paragraph 15?
"(1) a person may not appoint and administrator under paragraph 14 unless
(a) he has given at least two business days' written notice to the holder of any prior floating charge which satisfies paragraph 14(2), or
(b) the holder of any prior floating charge which satisfies paragraph 14(2) has consented in writing to the making of the appointment.
(2) One floating charge is prior to another for the purposes of this paragraph if
(a) it was created first, or
(b) it is to be treated as having priority in accordance with an agreement to which the holder of each floating charge was a party "
"For the purpose of sub-paragraph (1) a floating charge qualifies if created by an instrument which
(a) states that this paragraph applies to the floating charge,
(b) purports to empower the holder of a floating charge to appoint an administrator of the company,
(c) purports to empower the holder of the floating charge to make an appointment which would be the appointment of an administrative receiver within the meaning given by section 29(2), or "
"[17] I propose to adopt the approach taken by HHJ McCahill QC in Hill v Stokes [2010] EWHC 3726 (Ch) at paragraphs [63] [67], by HHJ Purle QC in Re Assured Logistics Solutions Ltd [2011] EWHC 3029 (Ch) at paragraph [33], and which I followed in Re Bezier Acquisitions Limited [2011] EWHC 3299 and Re Virtualpurple (supra) (which themselves have been followed by Arnold J in Re Ceart Risk Services [2012] EWHC 1178 and HHJ Purle QC in Re BXL Services [2012] EWHC 1877 (Ch)). This is to focus on the consequences of non-compliance and, taking into account those consequences, to consider whether Parliament intended the outcome of non-compliance to be total invalidity: in short, to ask whether it was a purpose of the legislation that an appointment made in breach of paragraph 28 should be null."
At paragraph 26 he went on to say:
"[26] " in my judgment considerable weight should be given to the consideration that the object of introducing out-of-court appointments was to streamline the process of business rescue: I adhere to the view which I expressed in Re Virtualpurple Professional Services Ltd that it is highly undesirable to have a multiplicity of circumstances in which the appointment of an administrator is automatically invalidated."
At paragraph 28 he stated:
"[28] I consider that this distinction is reflected in the terms of Schedule B1 itself as regards appointments by directors. Paragraphs 22 to 25 inclusive specify when it is that the directors or the company have the power to appoint administrators. Paragraphs 26 to 32 set out the procedural requirements for the exercise of the power. The structure of the Schedule suggests (albeit not strongly) that the Court should treat non-compliance with the requirements set out in paragraph 28 as leading to an irregularity rather than the nullity.
[21] "Defective out-of-court administration appointments can be divided into three categories:
(1) Cases where the defect is fundamental. In such cases, the purported administration appointment is a nullity. There are no insolvency proceedings on foot, and so there is nothing that the court can cure.
(2) Cases where the defect is not fundamental and causes no substantial injustice. Rule 12.64 of the Insolvency (England and Wales) Rules 2016 provides: "No insolvency proceedings will be invalidated by any formal defect or any irregularity unless the court before which objection is made considers that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of the court." Thus, provided the defect is not fundamental (i.e. not falling within paragraph 21(1) above), so that there are indeed insolvency proceedings on foot, the court must first satisfy itself that the defect or irregularity has caused no "substantial injustice". If so satisfied, then the proceedings will not be invalidated by any formal defect or irregularity.
(3) Cases where the defect is not fundamental, but substantial injustice is caused. If the defect again, not being a fundamental defect within paragraph 21(1) above is found to cause "substantial injustice", then the court must ask itself whether that substantial injustice can be remedied by an order of the court. Of course, the court will consider, in light of all the circumstances, whether it is appropriate to make a remedial order. If so, then the defect is cured on the court making the order. If the court cannot make a remedial order or does not consider that it is appropriate to do so, then the defect remains uncured."
[28] "If one asks the question whether Parliament can fairly be intended to have to have intended that an appointment made in breach of this provision should be invalid, in my view the answer is that Parliament can be taken to have intended that because it is consistent with the purpose of the provision that prior notice should be given in order that the first charge holder may act before the second charge holder does."
[28] "[the decision in Euromaster] supersedes the approach in Re Eco Link Resources Ltd (In CVL) The First Issue [as the effect of a failure to give notice in accordance with the Rules] should be determined on the basis that paragraphs 26-32 of Schedule B1 prescribe procedural requirements with the result that a breach will "naturally fall to be treated as irregular". It is also highly significant that Sir Terence Etherton when Chancellor approved Mr Justice Norris's reasoning [in Euromaster] in the case of Re Melodious Corporation , albeit in the context of Rule 7.55 of the Insolvency Rules 1986 (now Rule 12.65 of the Insolvency Rules 2016) (see paragraphs [73 and 75] of the judgment)."
Disposal