Defective appointment of administrators using the CE-Filing system (Re Carter Moore Solicitors)

Defective appointment of administrators using the CE-Filing system (Re Carter Moore Solicitors)

In the latest example of practitioners falling foul of the numerous tripwires surrounding the appointment of administrators using the CE-Filing system, this decision demonstrates the court’s increased willingness to exercise its discretionary powers to validate the appointment. It also highlights the pitfalls of a system presently designed to bring certainty and ease of use, but which instead brings about potentially disastrous consequences for relatively minor infractions. Written by Ali Tabari, barrister and mediator at St Philips Chambers.

Re Carter Moore Solicitors [2020] EWHC 186 (Ch), [2020] All ER (D) 61 (Feb)

What are the practical implications of this case?

This case is a further demonstration of the court’s ability to use its discretion sensibly when confronted with an error arising from the use of CE-Filing, and lends yet more support to applicants wishing to persuade judges to validate the appointment of administrators in cases where there has been some error or failure to comply with the various rules and practice directions concerning electronic working.

Unfortunately, this case also demonstrates the potential consequences of even the most minor procedural default, and ought to hasten a change in the rules which will put practitioners’ minds at rest and prevent the need for so many applications for declaratory relief being listed in an already-crowded court system.

Interestingly, in the past fortnight the Chancellor of the High Court, Sir Geoffrey Vos, has issued an interim practice direction which states that notices of appointment of administrators filed electronically outside of court hours will be referred to a High Court judge ‘at the first possible opportunity’ for them to determine the effective time and date of the appointment, such decision to be made on paper if possible in the first instance. Until there is a formal change in the rules or practice directions, this should hopefully be of some assistance and comfort.

What was the background?

The directors of the company filed a notice of intention to appoint administrators (NoI) on Monday 13 January 2020, pursuant to which they had ten business days in which to make the appointment before the NoI lapsed.

On the final day, Friday 24 January 2020, the directors filed a notice of appointment of administrators (NoA) via the CE-Filing system at 2.17pm. Everything within the NoA was compliant, except that the person uploading the document to the system selected the wrong drop-down box—instead of marking the NoA as being filed within existing proceedings, it was marked as a new case. For that reason, the court clerk rejected the NoA, but only did so at 4.04pm (ie outside the listed court opening hours for the purposes of the various rules and practice directions concerning CE-Filing).

Within three minutes of receiving the rejection, the NoA was re-filed electronically by the applicants, this time using the correct drop-down box. However, the court did not contact the applicants until 9.42am the following Monday, and the court marked the administration as having taken effect from 10.00am on the Monday, as that was when the court opening hours began. Unfortunately, this was 11 days after the NoI, and the applicants sought declaratory relief to regularise the position.

What did the court decide?

Mr Justice Snowden took into account the previous decision in Re SJ Henderson & Co Ltd [2019] EWHC 2742 (Ch), in which Insolvency and Companies Court Judge Burton had held that a NoA filed electronically outside of court opening hours would only take effect when the court next officially opened. The judge does not appear to have been taken to other cases on the same point in which the general curative provision in Insolvency (England and Wales) Rules 2016, SI 2016/1024, r 12.64 was utilised to regularise the position by declaring the administration to have taken effect at an earlier time (Re Skeggs Beef Ltd [2019] EWHC 2607 (Ch) per Mr Justice Marcus Smith; Re All Star Leisure (Group) Ltd [2019] EWHC 3231 (Ch), per His Honour Judge Cooke). However, the judge reached a pragmatic and sensible solution by a different method, namely relying on CPR Practice Direction 51O, paragraph 5.3(2), which allows the court to ‘remedy an error of procedure made while using Electronic Working, in accordance with CPR 3.10(b)’. In this case, the judge took the view that:

  • the NoA was compliant in every substantial way  
  • the original NoA was initially filed within court opening hours, and the compliant NoA was filed within three minutes of receiving the court’s initial rejection message  
  • there was no intention on the applicants’ part to pay a lower court fee or gain any advantage by selecting the wrong drop-down box  
  • the mistake was obviously inadvertent

Accordingly, the judge declared that the administration took effect from the date of the time of the first attempt to file it electronically, ie 2.17pm on the Friday, which was the tenth working day after the filing of the NoI.

Case details

  • Court: Chancery Division  
  • Judge: Mr Justice Snowden (sitting as Vice-Chancellor of the County Palatine of Lancaster)  
  • Date of judgment: 4 February 2020

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

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About the author:

Zahra started working as a paralegal at LexisNexis in the Lexis®PSL Banking & Finance and Restructuring & Insolvency teams in April 2019 and moved to the Corporate team in June 2020, where she currently works as a Market Tracker Analyst. Zahra graduated with 2.1 honours in BA French and Spanish and completed the GDL at BPP University. She has undertaken voluntary work for law firms in London, Argentina and Colombia.