Maltby Holdings Ltd v Spratt & Anor

Pre-action disclosure is discretionary and requires more than a plausible complaint about an insolvency administration or pre-pack sale. Under CPR 31.16, the applicant must show that the documents would fall within standard disclosure and that disclosure is desirable to dispose fairly of anticipated proceedings, assist resolution without proceedings, or save costs. Disclosure is not justified where the applicant can formulate its claim and obtain an independent valuation without the documents. The Companies Court’s inherent jurisdiction to supervise office-holders may be exercised by analogy with trust cases, but it does not provide a general investigative procedure or permit a fishing expedition. The same principles apply to requests for the sale contract and valuation material.

Maltby Holdings Ltd, the parent of a company in administration, applied for disclosure of valuation reports, related communications and the sale contract under the inherent jurisdiction of the Companies Court and, alternatively, CPR 31.16. The respondents were the joint administrators of Maltby Investments Ltd.

The proposed claims concerned the validity of the administrators’ appointment and whether the company’s assets had been sold to Citibank at an undervalue. The central issue was whether the requested documents were necessary or desirable before proceedings could be formulated or fairly resolved.

1. The application was dismissed. The requested valuation reports, related documents and sale contract were not ordered to be disclosed.

2. Under CPR 31.16, pre-action disclosure requires satisfaction of the conditions in rule 31.16(3). The document must be within the scope of standard disclosure under rule 31.6, and disclosure must be desirable to dispose fairly of anticipated proceedings, assist resolution without proceedings, or save costs.

3. The applicant could formulate any claim based on the value of EMI Group without seeing the administrators’ valuations. It knew the broad valuation results and possessed sufficient financial information to instruct its own valuers. Disclosure would instead risk a forensic review directed at attacking the existing valuations.

4. The proposed appointment challenge raised arguable questions about the operation of the facility agreement, the statutory insolvency tests and the possible relevance of Eurosail. However, the court did not need to decide those questions on the disclosure application. Even if the administrators’ appointment were invalid, the consequences and available remedies would require separate determination.

5. The inherent jurisdiction of the Companies Court exists to supervise and, where appropriate, intervene in the administration of insolvent estates. Authorities concerning trusts and insolvent office-holders establish the jurisdiction, but its exercise remains discretionary. It was not needed here because the applicant could bring any available challenge without the requested documents.

6. The court accepted that pre-packs must be capable of being policed after the event, but that policing must occur through the insolvency legislation and the assistance provided by the inherent jurisdiction. The application did not satisfy the statutory or discretionary requirements for disclosure.

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