Hall & Anor v Van Der Heiden

An interim order under section 252 of the Insolvency Act 1986 does not reserve exclusively to the court that made the order the power to grant leave for proceedings in another court to continue. The High Court may exercise that jurisdiction where the relevant proceedings have been allocated to it. Alternatively, the High Court may make a limited transfer under rule 7.11 of the Insolvency Rules of the aspect of the insolvency proceedings relating to those proceedings. In urgent circumstances, the court may grant leave where the trial has long been fixed, substantial preparation and expense have been incurred, and the application for the interim order appears to be a last-minute attempt to avoid the trial.

The claimants brought a building claim for damages for breach of contract, with a counterclaim by the defendant contractor. The trial had been fixed for five months. Shortly before trial, the defendant indicated that he had obtained an interim order from Swindon County Court under section 252 of the Insolvency Act 1986. The order purported to prevent the continuation of proceedings without leave.

The defendant did not attend and provided no copy of the order or supporting insolvency documents. The claimants applied to the High Court for leave to continue the trial. The central issue was whether the High Court had jurisdiction to grant that leave, or whether the application had to be made exclusively to Swindon County Court.

1. The court held that it had jurisdiction under section 252 of the Insolvency Act 1986 to grant leave for the trial to continue. Section 252 did not state that only the court making an interim order could grant leave. Sections 373 and 385, properly construed, supported the High Court’s jurisdiction.

2. The court followed the reasoning in Calor Gas v Piercy [1994] BCC 69, where the argument that only the county court making the interim order had jurisdiction was rejected. It also applied Clark v Coutts and Co [2002] EWCA Civ 943, which expressly adopted that reasoning and was binding on the court.

3. The alternative statutory analysis produced the same result. The reference in section 385 to the court allocated the relevant matter could refer to the High Court trial, rather than the separate insolvency proceedings. If necessary, rule 7.11 of the Insolvency Rules permitted the High Court to order a limited transfer of the aspect of the insolvency proceedings connected with the trial. Rule 7.11(4) did not require the whole insolvency proceedings to be transferred.

4. The claimants’ application for leave had overwhelming merits. The trial had been fixed for five months, substantial costs had been incurred, and the defendant’s last-minute conduct, lack of disclosure and failure to attend indicated a manipulative attempt to avoid the consequences of the trial. Leave was therefore granted under section 252 for the claimants to continue with the trial.

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