Equitas Ltd, Re

The court may waive statutory publicity requirements for an insurance business transfer scheme where strict compliance is impracticable, provided appropriate conditions secure the widest practicable notification. The waiver jurisdiction may be exercised before the scheme report and scheme documents are available. The requirement that an application under section 107 of the Financial Services and Markets Act 2000 be accompanied by a scheme report does not require the report to accompany the originating process when issued. It is sufficient that the report is available when needed and well before the court is asked to sanction the scheme.

Equitas Limited and Speyford Limited applied in connection with a proposed transfer of historic Lloyd’s insurance liabilities under Part VII of the Financial Services and Markets Act 2000. They sought waivers of requirements to publish notice in two national newspapers and to notify every policyholder. The insurance records covered a period of about 300 years and were in some cases unreliable, deficient or non-existent.

The application was made before the scheme report and the scheme itself were available. The central issue was whether the court had jurisdiction to grant the waivers at that stage, and whether it should exercise its discretion to do so.

1. Jurisdiction. The court had jurisdiction to determine the waiver application even though the scheme report did not accompany the originating process. Section 109(1) does not require the report to be supplied at the moment the proceedings are issued.
2. Construction of section 109(1). The word application is broad and may refer to the proceedings after issue, not merely to the originating process. The requirement that the application be accompanied by the scheme report is therefore satisfied if the report is available to the court and policyholders when required, and in any event well before the court sanctions the scheme.
3. Waiver discretion. Regulation 4(2) permitted waiver of the requirements in regulation 3(2)(a)(ii) and (b), subject to conditions. Although the better practice is generally to consider such matters when the scheme report and scheme are available, an early application was procedurally sensible where substantial expenditure would otherwise be incurred and strict compliance was unlikely to be possible.
4. The court was satisfied that the proposed substitution of a suitable business paper for one national newspaper, and the proposed steps to notify policyholders, justified the waivers. The waivers did not fetter the court’s later discretion whether to sanction the scheme, including consideration of the extent to which relevant constituencies had been adequately notified.
5. The waivers were granted subject to the stated conditions.