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3-06-2021

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Manolete Partners Plc v Hayward And Barrett Holdings Ltd & Ors [2021] EWHC 1481 (Ch) represents something of a procedural set back for insolvency litigation.

The applicant, as assignee of various claims arising out of the liquidation of Blackwater Plant Ltd, issued an application using form IAA as provided for by r. 1.35  Insolvency (England and Wales) Rules 2016. The application included claims under various provisions of the Insolvency Act 1986 and claims for relief for misfeasance. The third and fourth respondents took the point that a claim in misfeasance made by anyone other than an office-holder under s. 212 IA 1986 had to be brought by claim form. They sought an unless order requiring the applicant to pay the additional issue fee that would have been payable had the claim been commenced under CPR Part 7.

Chief ICC Judge Briggs agreed. He held:

“49. As joint liquidators of Blackwater Mr Clark and Mr Renshaw [the liquidators] were able to issue insolvency proceedings using an Insolvency Application against the third and fourth Respondents.

50. As assignee of the transaction avoidance claims the Applicant can bring the proceedings against the third and fourth Respondent by way of an Insolvency Application.

51. Section 212 falls within Part IV of the Act. But for the assignment to the Applicant, the joint liquidators may use the section to bring the Blackwater Claims in their own name making use of the Insolvency Application procedure.

52. The Applicant is not a liquidator, official receiver, contributory or creditor. A distinction is to be drawn between an assignment of claims vested in the joint liquidators and capable of assignment, claims vested in Blackwater and capable of assignment by the joint liquidators and the office of liquidator. The office is not capable of assignment.

53. A Part 7 Claim should have been made to pursue the assigned Blackwater Claims.”

He decided that the procedural defect could, however, be cured by ordering payment of the  court fee for  a Part 7 claim within 7 days of his handing down his judgment, which would put the applicant in the same position it would have been in if it had issued the company’s claim using the appropriate (claim form) procedure.

The result is perhaps unsurprising in the light of the recent decision of HHJ Cawson QC in Re Taunton Logs Ltd (in liquidation) [2021] BPIR 427. What is curious, however, is the judge’s rejection of the suggestion that the use of an application where a misfeasance claim was brought with other claims under the provisions of the IA was established practice. Even more curious is the decision of the respondents to take the point they did: if they lose they will simply have added to the costs they themselves will ultimately have to bear, although if the applicant fails to pay the extra court fee they could, of course, stymie part of the action.

“I reach these conclusions with regret. The criticisms of the procedure are well made by Mr Curl [counsel for the assignee]. They do not promote a convenient or sensible or economical use of court resource. In modern parlance the result fails to ensure that claims of this nature are dealt with expeditiously, allotting an appropriate share of the court's resources. An office-holder and assignee of claims will be forced to issue claims arising from an insolvency using different procedures, in different lists within the Business and Property Courts, with a risk that without a transfer they will be case managed, at least, by different judges although the claims arise out of the same facts.”

The chief ICC judge was himself troubled by the result. He said in para 60 of his judgment:

No doubt representations will be made to the Insolvency Service in the course of the consultation on the Insolvency Rules that is at present under way.

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