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In Randhawa v Turpin, a challenge to the appointment of administrators resulted in a reaffirmation by the Court of Appeal of the need for formality and strict compliance when managing the affairs of a company. Ali Tabari, of St Philips Stone, examines the court's decision and considers its implications.
Randhawa and another v Turpin and another (as former Joint Administrators of BW Estates Ltd)  EWCA Civ 1201,  All ER (D) 40 (Aug)
The judge had erred in holding that the sole director of a company, whose articles of association had required two directors for its board meeting to be quorate, had validly appointed joint administrators under paragraph 22 of Schedule B1 to the Insolvency Act 1986 (IA 1986). Among other things, the Court of Appeal, Civil Division, held that the sole director's resolution had been incurably invalid in the circumstances, and could not have been rendered valid by the application of the principle arising from the decision in Re Duomatic Ltd ( 1 All ER 161) (the Duomatic principle).
What was the background to the case?
The company initially had two shareholders, a husband and wife. The wife's shareholding was transferred to a company, Belvadere (an Isle of Man company), which was later dissolved but remained on the register as being a member of the company. The husband was disqualified from being a director, and his son became the sole director, while still being apparently accustomed to receiving instructions from the husband.
The son appointed the respondents as administrators over the company. The appellants, having a final charging order over the husband’s shareholding in the company and also having taken an assignment of debt from one of the company’s creditors, appealed against the administrators’ appointment, which they claimed was invalid.
At first instance, HHJ Purle QC found that the administrators’ appointment was valid. For further reading on this decision, see News Analysis: Validity of appointment and costs of administration—application of Duomatic principle (Re BW Estates Ltd, Randhawa v Turpin).
What issues arose for the Court of Appeal’s consideration?
The key areas of dispute were whether:
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