Summary

An order under which a small firm of solicitors would deliver up documents and information required by liquidators to fulfil their duty under the Insolvency Act 1986 s.234 and s.236 could be drafted in a way that was not draconian in its demands on the resources of the firm, but it was needed to ensure that the information was supplied without undue delay and expense to the parties and the court.

Facts

The applicant liquidators (J) applied pursuant to the Insolvency Act 1986 s.234 and s.236 for the delivery up by the respondent firm of solicitors (C) of documents and information relating to a company in liquidation and associated parties.

J had applied for the documents and information in the course of fulfilling their statutory duties, and submitted a draft consent order. C opposed the making of the order on the grounds that it was draconian, and/or unreasonable, and/or incomprehensible.

C submitted that the draft order contained undefined terms, that compliance with it required substantial resources of personal time by a small firm of legal practitioners including one in his 70s and another who had recently returned to work, and incurred costs. C argued that the court should wait to see the evidence in answer before making any order other than directions.

Held

J were seeking to fulfil their statutory duties and should be provided with the information needed to do so. The principles in, for example, Shierson v Rastogi [2002] EWCA Civ 1624, [2003] 1 W.L.R. 586 should be borne in mind, Shierson applied. An order would be made without the draconian effects complained of by C, but the parties needed to know what documents were in issue and why those issues arose. Although the information might be provided anyway, such an order was needed, as it was not clear that it would be. A proviso could be added to make sure there would not be draconian effects. Issues should be identified as soon as possible to ensure speedy and efficient disposal of the application and proper use of court time for the benefit of the parties, the court and other court users. Co-operation between the parties should be encouraged, which meant J providing relevant information in their evidence. It might also help the parties negotiate and settle their differences. An order would be made, bearing in mind the general principle of the liquidators' duties and also the fact that they were in the instant case investigating a potential underlying fraud involving significant sums of money. The instant application had every appearance of being subject to a slow and expensive legal process unless case management intervened. C had proposed a proviso, but it did not meet the case management requirements identified, so the court would provide one, a draft of which would be sent out before the handing down of the instant judgment for any variations to be considered. The order would also provide for a new case management hearing to take place after the conclusion of the evidence.

Application granted