Developments since Keyworker Homes

February 20, 2020

In this Article, Carly Sandbach provides a useful summary to practitioners of the key developments since the Keyworker decision.

Its only a few months since we reported the outcome in the decision of Keyworker Homes (North West) Limited [2019] EWHC 3499 (Ch) (see previous post here). In a judgment which disagreed with the recently reported decisions of Re Skeggs Beef Limited [2019] EWHC 2607 (Ch) and Re SJ Henderson and Co Ltd [2019] EWHC 2742 (Ch), HHJ Hodge QC sitting as a Judge of the High Court found:

  1. Notices of Intention to Appoint Administrators (“NOI”) can be filed at any time via e-filing and take effect at the time they are filed via e-filing.
  2. Directors or the Company can make out of hours appointments of Administrators by filing a Notice of Appointment (“NOA”) at any time via e-filing. The appointment will take effect at the time the documents are filed via e-filing.
  3. That for the purposes of the computation of the period of 10 business days pursuant to para 28(2) of Sch.B1 of the Insolvency Act 1986, the first business day will be the business day after the date on which the NOI was filed – thus it is a ‘clear days’ calculation.

Commenting at the time on the Keyworker decision, Carly said :

“The decision is of enormous significance to Insolvency Practitioners and those who appoint them. This is the latest in a series of High Court decisions in this area concerning the interplay between the e-filing regime and out of court appointments of Administrators. We wait to see whether this will be the last word on the matter, or whether an appellate decision or an amendment to the Practice Direction on Insolvency Proceedings will be needed to ultimately settle the question.”

We have yet to see an appellate decision, amendment to the Practice Direction or indeed an amendment to the Insolvency (England and Wales) Rules 2016, but there have been several further decisions, and indeed some guidance issued in this area. A summary of developments since the Keyworker decision appears below.

28th November 2019

The decision of HHJ David Cooke in Causer v All Star Leisure (Group) Ltd [2019] EWHC 3231 (Ch), (made before the decision in Keyworker was published) concerned the validity of the appointment of administrators by a Qualifying Floating Chargeholder by the filing of a NOA after 4pm:

  • It was not open to qualifying floating chargeholders to use e-filing “when the court is closed”.
  • The filing outside court hours was an “irregularity” that could be cured under r.12.64 IR 2016.
  • The fact that all courts did not have the same published opening hours was another source of confusion (an appointer could have filed electronically in London, but not in Birmingham because that court closed earlier).
  • The Judge further observed that in his view the uncertainties created by the drafting of the provisions could be resolved, without any conflict with the 1986 Act or the IR 2016, by removing the carve pout from PD 51O and the PDIP para.39.

30th January 2020

A Practice Note is issued by the Chancellor, Sir Geoffrey Vos, in which the concerns of practitioners regarding the effect of the appointment of administrators purportedly made by e-filing notices outside the court’s usual counter-opening hours, are acknowledged. Sir Geoffrey Vos indicated that these issues would be addressed by an amendment to the IR 2016, but that in the meantime, court clerks would be directed to process filings in the manner set out in the Note. Namely:

  • Appointments by company or directors under ¶22 – NOAs filed when the court is closed will be referred to a specified High Court Judge, who will determine the validity of the appointment, and if appropriate, the time at which the appointment takes effect.
  • Appointments by QFCs under ¶14 – if these are filed by CE-Filing rather than the fax or email procedure set out in rule 3.20, these will similarly be referred to a specified High Court Judge, who will determine the validity of the appointment, and if appropriate, the time at which the appointment takes effect.

The Note does not set out, in accordance with what rules or principles the envisaged determinations will be made.

4th February 2020

The decision of the Vice-Chancellor, Mr Justice Snowden in Carter Moore Solicitors Limited [2020] EWHC 186 (Ch) concerned the validity of the appointment of Administrators by the directors of the Company. Due to a number of technical/administrative errors the attempt to file the NOA at 14.17 on Friday 24 January was ineffective, and it was treated as having been filed at 16.07. The court clerk sealed and endorsed the NOA with the date 27 January and time 10.00. The court clerk apparently took the view in accordance with the guidance suggested by ICC Judge Burton in SJ Henderson, the NOA should be treated as having been filed at the first time at which the Court was next open to the public.

The decision was not covered by the guidance set out in the Practice Note, the relevant filings having occurred prior to the issue of that guidance. Snowden J observed however that “wherever possible and until the position is clarified by a rule change, practitioners should attempt to avoid CE-filing a [NOA] out of Court hours”.

Ultimately, the analysis by Snowden J was that the attempted filing at 14.17 on Friday 24 January should stand. As such, he was not required to grapple with the question of the validity of an out of hours filing.

7th February 2020

The decision of Mr Justice Zacaroli in Re Statebourne (Cryogenic) Ltd [2020] EWHC 231 (Ch) is the first reported decision in respect of a case referred to a Judge under the guidance issued by the Chancellor on 30 January. A defect as to the time at which the notice of appointment was filed was analysed in the same way as the Carter Moore Solicitors Limited decision referred to above. However, in this case a further issue arose. The NOI was filed on 17 January and the NOA was filed on 31 January. The Court was thus required to consider the correct interpretation of the ten day period referred to in ¶28(2). Zacaroli J declined to adopt the “expansive” approach adopted by HHJ Hodge QC in Keyworker, rather he concluded (in line with the more literal interpretation of the words) that the period of ten days commences on the date on which the NOI is filed with the Court. Accordingly, in the instant case, the NOA was filed a day late. Zacaroli J nevertheless determined that such a defect was capable of being waived under rule 12.64, and did not invalidate the Administrators appointment.

Given the variety of conflicting first instance decisions on these matters, the advice of the Vice-Chancellor is surely correct that “wherever possible and until the position is clarified by a rule change, practitioners should attempt to avoid CE-filing a [NOA] out of Court hours”, and further that NOA’s should be filed within 10 days (construed narrowly and not expansively).

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