Winsor v Bloom (In re Railtrack plc)

The insolvency moratorium on other proceedings covers legal and quasi-legal proceedings against a company or its property. It does not generally extend to a regulatory decision-making process merely because that process involves written applications, representations and a binding determination.

A regulator deciding an access-contract application performs a broader public-interest function. The regulator is not adjudicating a legal process against the company, and the administrators cannot control the exercise of that regulatory function. Proceedings to enforce a regulatory direction after it has been made are different and fall within the moratorium.

The Rail Regulator sought a declaration concerning the application of section 11(3)(d) of the Insolvency Act 1986, as modified for railway administration, to an application under section 17 of the Railways Act 1993.

Railtrack was subject to a railway administration order. EWS applied for an access contract, and the Railway Administrators contended that the statutory moratorium prevented the Rail Regulator from determining the application without their consent or the court’s leave. The parties later resolved their contractual differences, but the Regulator pursued clarification of the legal issue.

The Vice-Chancellor held on 21 May 2002 that section 11(3)(d) applied to the section 17 procedure. The central issue on appeal was whether that regulatory procedure constituted proceedings against Railtrack or its property.

Appeal allowed unanimously. Lord Woolf CJ delivered the judgment, with Lord Justice Waller and Lord Justice Robert Walker agreeing.

1. Meaning of the moratorium. The court followed the approach in Bristol Airport plc v Powdrille [1990] Ch 744. Section 11(3)(d) covers a wide category of legal or quasi-legal proceedings, but the proceedings must be against the company or its property. The expression does not encompass every step that may affect a company.
2. Character of the section 17 process. The section 17 procedure has procedural features associated with legal proceedings, including written applications, representations and a reasoned determination. Those features are insufficient. The Rail Regulator must take account of section 4 considerations, including the public interest, railway users and the wider railway network. His decision may differ from the position of both the applicant and the facility owner. That regulatory role is inconsistent with an arbitration or a legal process against the company.
3. Statutory context. Sections 17 and 18 provide different routes to the same regulatory objective, namely the making of access contracts subject to the Regulator’s requirements. It would therefore be anomalous to treat section 17 as subject to the moratorium when section 18 was not said to be. The railway administration order did not transfer the Regulator’s network-wide supervisory role to the administrators or the court. The administrators’ consent could not operate as a control over that role. The court accepted, consistently with Re Atlantic Computers Systems Plc [1992] Ch 505, that administrators must act promptly and responsibly and must not use consent as a bargaining counter.
4. Enforcement. The express reference in Schedule 6 to proceedings under or for the purposes of sections 55 and 57A of the Railways Act 1993 concerned enforcement procedures. Once a section 17 direction had been made, civil proceedings to enforce it under section 144 were subject to section 11(3)(d). The initial regulatory application and determination were not.
5. The appeal was allowed. The declaration sought by the Rail Regulator was granted. The costs of both actions were payable as an expense of the railway administration, and leave to appeal was refused.

• Court of Appeal allowed the appeal and granted the declaration sought by the Rail Regulator: [2002] EWCA Civ 955.
• High Court of Justice, Chancery Division held on 21 May 2002 that section 11(3)(d) applied to determinations under section 17 of the Railways Act 1993.