Metronet Rail BCV Ltd, Re Insolvency Act 1986

Statutory definitions must be construed in the context of the legislation as a whole and the purpose Parliament intended to achieve. Under Schedule 15 to the Greater London Authority Act 1999, an “other appointee” is a company to which property, rights or liabilities of the existing PPP company are transferred so that it can carry out relevant PPP activities. Existing subcontractors and financiers whose contracts or accrued claims are merely transferred to the new appointee are not “other appointees” and have no statutory veto. Such transfers do not deprive them of their contractual rights for the purposes of Article 1 of the First Protocol.

Special PPP administrators appointed to Metronet Rail BCV Ltd and Metronet Rail SSL Ltd sought guidance on the construction of Schedule 15 to the Greater London Authority Act 1999. They proposed transferring the companies’ undertakings and contracts to one or more new PPP companies.

The administrators asked whether existing subcontractors, Trans4M Ltd, shareholder creditors and finance companies were “other appointees” whose consent was required under paragraph 2(1). The respondents argued that the definition covered any company affected by the proposed transfer scheme. The central issue was whether the application was premature and, if not, the proper meaning of “other appointee”.

1. The application was not premature. Although the detailed transfer scheme had not been formulated, the relevant contractual relationships and the proposed categories of transfer were known. The court could determine the principal construction issue, while leaving the question whether a particular company was affected to be assessed against the final scheme.

2. The words “other appointee” could not be read in isolation from Schedule 15. The definition had to be read with the proposal in paragraph 1(1)(b), the scheme-making power in paragraph 2(1), the allocation provisions in paragraph 2(6), and the transfer provisions in paragraph 3. The statutory context showed that an other appointee was a company receiving property, rights or liabilities in connection with carrying out relevant activities.

3. Relevant activities were activities performed under a PPP agreement. Since those activities could be performed only by PPP companies, each company within paragraph 2(1) had to be, or become, a PPP company. The statutory consent requirement therefore applied to PPP companies receiving assets, rights or liabilities, not to existing subcontractors whose contracts were assigned intact to the new appointee, nor to creditors whose accrued claims remained against the existing companies.

4. The statutory scheme was consistent with its purpose. Giving subcontractors a veto over assignment would undermine paragraph 3, which was designed to permit transfers without novation. Paragraph 3(2)(c), referring to “other persons” affected by the scheme without giving them a veto, further confirmed the distinction.

5. The respondents’ Article 1 argument failed. Their contractual rights were possessions, but the transfer scheme merely assigned the benefit of the subcontracts and left accrued claims intact. It therefore did not deprive them of those rights, so no question of justification arose.

6. The court directed that “other appointee” meant a PPP company in whose favour property, rights or liabilities of the existing appointee were transferred under paragraphs 2 and 3 of Schedule 15. No additional words were required.

First-instance decision. No prior appellate decision is stated in the judgment.