Administration—e-filing a notice of appointment out of court hours (Re S.J. Henderson & Co Ltd; Re Triumph Furniture Ltd and Re Skeggs Beef Ltd)

Administration—e-filing a notice of appointment out of court hours (Re S.J. Henderson & Co Ltd; Re Triumph Furniture Ltd and Re Skeggs Beef Ltd)

Two different judgments have recently considered the consequences of e-filing a notice of appointment of an administrator out of court opening hours (so as to thereby appoint an administrator out-of-hours) with both courts finding that there is no legislative power which permits practitioners to do so. This has real implications for those working in this area, as filing a valid notice of appointment (under paragraphs [18] and [29] of Schedule B1 to the Insolvency Act 1986 (IA 1986) is a prerequisite to the appointment of the administrator actually taking effect at all (see paragraphs [19] and [31] of Schedule B1 to IA 1986). Attempting to e-file such a notice outside court hours—which is easy to do considering the 24–hour availability of e-filing—can mean the appointment of the administrator therefore does not take effect at the time of filing, or can instead lead to the appointment being held to be defective. Practitioners need to be aware of the limitations of the e-filing regime in this context, so as to avoid there being any question over the validity of an administrator’s appointment at the time he or she take their first acts in the administration. Written by Emily Gailey, barrister, at Maitland Chambers.

Re S.J. Henderson & Co Ltd; Re Triumph Furniture Ltd [2019] EWHC 2742 (Ch)

Re Skeggs Beef Ltd Eason and another (as joint administrators of Skeggs Beef Ltd (in administration)) v Skeggs Beef Ltd (in administration) [2019] EWHC 2607 (Ch)

What are the practical implications of these cases?

Since the introduction of the Electronic Working Pilot Scheme, and its subsequent expansion, the concept of court opening hours has generally become less relevant to the day-to-day business of filing documents at court. It is now common for solicitors to e-file documents at court before 10am, for example, or after 4.30pm.

Where the document to be e-filed was the notice of appointment of an administrator, however, it was previously unclear whether it was possible to e-file such a notice outside court opening hours at all. There is, under rule 3.20 of the Insolvency (England and Wales) Rules 2016 (IR 2016), SI 2016/1024, a prescriptive regime permitting the holder of a qualifying floating charge to file a notice of appointment of an administrator when the court is closed—either by faxing it to a designated telephone number, or by emailing it to a designated email address (ie not via e-filing). There is no equivalent provision permitting the filing of such a notice out of hours by the company or its directors.

This left practitioners in the situation where, regularly, notices of appointment were being e-filed at time when technically the court counter was closed, and the administrators were therefore left uncertain whether or not their appointment had actually taken effect. As administrators can often be appointed urgently and can often take significant steps within hours of being appointed, the question of whether (or when) administrators were appointed can self-evidently have serious consequences for the administration. The judgments in the cases considered in this note provide some helpful clarification for practitioners on this issue.

What was the background?

This issue was considered separately, but effectively simultaneously, in the two judgments (although Marcus Smith J in Re Skeggs Beef Limited states that he had sight of ICC Judge Burton’s judgment in Re S.J. Henderson & Co Ltd; Re Triumph Furniture Ltd before his judgment was published, he records that his judgment was written and finalised without reference to it). The issue had also previously been considered, albeit at speed, by Barling J in the case of Re HMV Ecommerce Ltd [2019] EWHC 903 (Ch).

In Re HMV Ecommerce Ltd Barling J had held that, in the light of the wording of CPR PD 51O, and in particular the wording of paragraph 8.1 of the Practice Direction on Insolvency Proceedings (PDIP), it was unclear whether or not a company or its directors could e-file a notice of appointment outside court opening hours. Accordingly, he was willing to declare that the appointment took effect at the time notice was filed, albeit that it was potentially subject to a procedural defect.

Both ICC Judge Burton and Marcus Smith J were effectively invited to grapple with that perceived ambiguity in their subsequent judgments. In Re S.J. Henderson & Co Ltd; Re Triumph Furniture Ltd (two cases which came before ICC Judge Burton on the same issue on consecutive days, and in relation to which she therefore gave judgment together) notices of appointment had been e-filed on behalf of the companies or their directors outside the court’s usual opening hours. In Re Skeggs Beef Limited the situation was identical, save that the notice of appointment had been e-filed on behalf of the holders of a qualifying floating charge.

What did the court decide?

In both judgments, the judges considered the legislative history of the relevant provisions and identified that there had been, since at least 2003, a regime in place under the relevant Insolvency Rules which permitted qualifying floating charge holders to file a notice of appointment when the court was closed by following a series of prescribed steps. There was no equivalent, however, for notices of appointment filed on behalf of companies or their directors.

Both judges concluded that the effect of the introduction of the e-filing regime had not been to provide companies and their directors with the ability to file notices of appointment (and therefore appoint administrators) out of hours, when they had never before had such a right. Nor could it have disapplied the effect of IR 2016, SI 2016/1024, r 3.20 for qualifying floating charge holders. The decision of Barling J in Re HMV Ecommerce Ltd was therefore not followed.

Accordingly, in Re S.J. Henderson & Co Ltd; Re Triumph Furniture Ltd ICC Judge Burton held there was no legislative power which enabled directors to appoint an administrator before the court counter formally opened for business. As a result she held that the appointment of the administrators took effect at 10am on the next working day following the e-filing, but not before.

Contrastingly, in Re Skeggs Beef Limited, Marcus Smith J concluded that the appointment by the qualifying floating charge holders had been defective, because the procedure under IR 2016, SI 2016/1024, r 3.20 had not been complied with, but that it was not invalid because this amounted to a purely formal defect. He therefore declared that the appointment nevertheless took effect at the time the notice was actually filed.

This difference is likely to be a consequence of the different rights of qualifying floating charge holders and directors identified in the two judgments. The former can appoint administrators out of hours, and in Re Skeggs Beef Limited they just followed the wrong procedure for doing so, whereas the latter have no power to do so at all. It makes sense, therefore, on that analysis, that the purported appointment by the directors was invalid until the court counter opened, whereas the appointment by the qualifying floating charge holders was merely defective.

In Re S.J. Henderson & Co Ltd; Re Triumph Furniture Ltd ICC Judge Burton also addressed, albeit on an obiter basis, the concerns among practitioners in relation to the ability of parties to file a notice of intention to appoint administrators outside of court hours. The PDIP is silent about such notices. ICC Judge Burton considered that the legislature had demonstrated no desire to discriminate between a notice of intention to appoint administrators filed on behalf of a holder of a qualifying floating charge and those filed by a company or its directors. Accordingly, she considered there was nothing to prevent a notice of intention to appoint administrators being e-filed by any party out of court hours.

Case details

Re S.J. Henderson & Co Ltd; Re Triumph Furniture Ltd

  • Court: High Court, Chancery Division  
  • Judge: Insolvency and Companies Court Judge Burton

  • Date of judgment: 10 October 2019

Re Skeggs Beef Ltd

  • Court: High Court, Chancery Division   
  • Judge: Mr Justice Marcus Smith  
  • Date of judgment: 5 October 2019

Emily Gailey is a barrister at Maitland Chambers. If you have any questions about membership of LexisPSL’s Case Analysis Expert Panels, please contact caseanalysis@lexisnexis.co.uk.

The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.

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