Horler v Rubin & Ors

In insolvency proceedings, a proxy appointed for a creditors’ meeting has the authority conferred by the Insolvency Rules 1986. Where the principal gives no voting instructions and imposes no express prohibition, the proxy-holder may exercise discretion, and the vote counts as the principal’s vote. The authority is actual authority, not merely ostensible authority. A creditor therefore cannot complain that a trustee wrongfully applied estate monies where the creditor’s authorised proxy voted for the relevant resolutions. An appellate court may determine the point where the existing factual findings and opportunity to give evidence provide an adequate basis.

Mr David Rubin, trustee in bankruptcy of Mr Andrew Millar, applied proceeds from shares which were partnership assets towards Millar’s personal bankruptcy debts and trustee fees. Mr Daniel Horler, a creditor and former partner, challenged the application. The Chancery Division found that Horler had consented to one application but not the other, and upheld his complaint concerning the Jamestown monies. The appeal concerned whether Horler’s proxy at a creditors’ meeting had authority to approve resolutions authorising the dividend and costs, despite Horler’s lack of personal instructions or consent.

The appeal was allowed unanimously.

1. The court applied rules 8.1(1), 8.1(6) and 8.3(6) of the Insolvency Rules 1986. A proxy is an authority to attend a meeting and speak and vote as the principal’s representative. The proxy-holder must vote as directed, abstain, or propose a resolution in accordance with the proxy. Where the proxy contains no relevant direction, the proxy-holder may exercise discretion.
2. The authority conferred by a proxy is actual authority, rather than ostensible authority. The correct question was not what Mr Horler expressly authorised Mr Hogg to do, but what he expressly forbade him from doing. Matters not forbidden were within the authority conferred by the proxy. This was consistent with Re Cardona [1997] BCC 697, 701, describing a proxy as a form of agency enabling the principal to express views at a meeting without being present.
3. The court was entitled to consider the point although it had not been fully developed at trial. Mr Horler had been given an opportunity to explain his instructions to Mr Hogg. The relevant facts did not change because a different legal question was asked. The judge had found no instruction prohibiting the vote, and Mr Horler’s failure to complain for more than a year supported the conclusion that Mr Hogg had not exceeded his authority.
4. Mr Hogg’s vote therefore counted as Mr Horler’s vote. As against Mr Horler, the application of the Jamestown monies to the dividend and bankruptcy expenses was not wrongful, and he had no valid complaint. The case was analogous to the judge’s conclusion concerning proceeds whose application Mr Horler had personally approved.

• Court of Appeal (Civil Division): The appeal was allowed unanimously. Mr Horler was treated as having voted in favour of the relevant applications through his authorised proxy.
• Chancery Division: His Honour Judge Raynor QC held that Mr Horler had no valid complaint concerning applications to which he had consented, but did have a valid complaint concerning the Jamestown monies because he had not personally consented.