Caldero Trading Ltd v Beppler & Jacobson Ltd & Ors

The court was asked to construe paragraph 7.2 of an order of Mr Justice Newey (16 July 2012) which limited the powers of the provisional liquidators of Beppler & Jacobson Limited. The key issue was whether the provisional liquidators were entitled to require delivery up of all the company's books and records.

The judge held that paragraph 7.2 must be read as a deliberate restriction of the wider powers previously conferred and that the power extends only to documents "reasonably necessary" and "solely for protecting and preserving the assets" of the company. The provisional liquidators therefore were not entitled to call for documents which do not fall within that description. The court rejected the submission that the provisional liquidators' professional judgment alone determines the scope of the power and granted the respondents' declaration to that effect. The judge declined to order delivery of all books and records but indicated he would make a more limited delivery order (for specific categories) after further argument.

Background and parties: The dispute arose in proceedings concerning BJUK (Beppler & Jacobson Limited) following a petition and a negotiated settlement recorded in an order of 16 July 2012. The provisional liquidators had sought delivery up of all BJUK's books and records from a director, Mr Telser, whose solicitors held the papers. The third to eighth respondents sought a declaration that the provisional liquidators were not entitled to call for all such documents and alternatively proposed that the respondents' solicitors should filter documents for disclosure. The provisional liquidators cross-applied for an order under section 234 of the Insolvency Act 1986 for immediate delivery of all books, papers and records.

Nature of the application: The applicants asked (1) for a declaration that the provisional liquidators were not entitled to all the books and records, and (2) alternatively that disclosure could be effected by the applicants' solicitors reviewing and providing only asset-revealing documents. The provisional liquidators sought an order for delivery up of all documents in the respondent's possession or control.

Issues framed:

• What is the proper construction of paragraph 7.2 as amended by Mr Justice Newey?
• Does paragraph 7.2 permit the provisional liquidators to call for all books and records?
• Who decides whether a document falls within the scope of the power (the provisional liquidators or the court / a third party)?

Court's reasoning: The judge applied ordinary principles of contractual/ordering construction in the factual matrix and treated Newey J's order as a commercial bargain which deliberately narrowed the earlier wide powers. The wording of paragraph 7.2 was read to mean the provisional liquidators may obtain "documents reasonably necessary solely for protecting and preserving the assets" (the judge read "documents" as encompassing books, papers and records). The qualifying words "reasonably necessary" and "solely" were decisive limitations. The court refused to accept that the provisional liquidators' professional view alone determined scope; that approach would permit a fishing expedition inconsistent with the order. The court found the respondents' proposal that their solicitors filter documents inappropriate because it would place a partisan third party in the role of determining scope. The judge therefore granted the respondents' primary declaration, refused the alternative filtering declaration, and refused to make the broad delivery-up order sought by the provisional liquidators but indicated willingness to consider a limited order specifying categories of documents after further argument.

Statutory and contextual points: The court treated the amended paragraph as a refinement of statutory powers and had regard to the Insolvency Act provisions including section 234, section 236 and section 127 as background, but the construction turned on the words of the order and the factual matrix.

The court granted the respondents' declaration that the provisional liquidators were not entitled to call for all the books and records of BJUK. The judge held that paragraph 7.2 is limited to documents "reasonably necessary" and "solely for protecting and preserving the assets" and rejected the contention that the provisional liquidators' professional view alone determines the scope. The court refused the respondents' proposal that their solicitors should filter documents and declined to order immediate delivery of all papers; it indicated it would make a more limited, category-based delivery order after further argument.