HSBC Bank Plc v Tambrook Jersey Ltd

The Court of Appeal considered the meaning and scope of section 426 of the Insolvency Act 1986 and whether the High Court in England and Wales could, at the request of the Royal Court of Jersey, make an administration order in respect of a Jersey company whose centre of main interests was in Jersey. The court held that s.426(4) should be read broadly: the English court may "assist" a foreign (here Jersey) insolvency court by making orders asked for in a Letter of Request even where there are no formal insolvency proceedings (such as désastre) pending or contemplated in the requesting jurisdiction. The Court concluded that the Royal Court had been exercising its insolvency jurisdiction by considering and issuing the Letter of Request and that the High Court had jurisdiction under s.426 to make the administration order requested. The appeal was allowed and administrators were ordered to be appointed.

Background and parties: Tambrook Jersey Limited was a Jersey incorporated company which became insolvent after a failed English property development. HSBC Bank plc, as secured creditor, sought appointment of administrators in England to realise assets. The company had its centre of main interests in Jersey and there was no equivalent English-style administration procedure available in Jersey; Jersey's principal insolvency remedy was désastre, which was considered disadvantageous in the circumstances.

Procedural posture: The Royal Court of Jersey issued a Letter of Request for the English High Court to make an administration order under the Insolvency Act 1986. Mann J in the High Court dismissed the Bank's application, holding that s.426(4) did not permit the English court to assist where the requesting foreign court was not itself exercising insolvency proceedings. The Bank appealed to the Court of Appeal.

Issues: (i) Whether the High Court had jurisdiction under s.426(4) and (5) to act on a Letter of Request from the Royal Court of Jersey to make an administration order in England in respect of a Jersey company; (ii) the meaning of "assist" in s.426(4) and whether it requires formal insolvency proceedings to exist or be contemplated in the requesting court; (iii) whether the Royal Court had exercised its insolvency jurisdiction in issuing the Letter of Request.

Reasoning: The Court of Appeal concluded that Mann J had adopted an unduly restrictive interpretation of s.426. The wording of s.426 refers to courts "having" jurisdiction and should not be read as requiring the requesting court to be actively "exercising" formal insolvency proceedings. The authorities (including Dallhold, Hughes, Television Trade Rentals and decisions of the Jersey Royal Court) support a broad, purposive construction of s.426 to facilitate cross-border co-operation and the objective of achieving a single, efficient insolvency administration where practicable. The Royal Court had carefully considered jurisdiction and the creditors' interests and had issued the Letter of Request as an exercise of its insolvency jurisdiction. On that basis the English court could properly "assist" by applying applicable English insolvency law and making the administration order requested.

Relief sought and disposition: The Bank sought an administration order under the Insolvency Act 1986 pursuant to the Letter of Request. The Court of Appeal allowed the appeal, holding that the High Court had jurisdiction and that appointment of administrators was appropriate; the court ordered appointment on the terms of the draft order submitted.

Appeal allowed. The Court of Appeal held that s.426(4) of the Insolvency Act 1986 permits the High Court to assist a foreign insolvency court by making the orders requested in a Letter of Request even where the requesting court is not conducting formal insolvency proceedings, provided the requesting court is exercising its insolvency jurisdiction in issuing the request. Mann J's narrower construction was rejected as unduly restrictive and inconsistent with a purposive approach and the objective of facilitating a single efficient insolvency administration.

Appeal from the High Court of Justice, Chancery Division, Companies Court (Mann J, judgment 12 April 2013, Companies Court claim no. 2281/2013). The Court of Appeal allowed the appeal and appointed administrators on terms of the draft order.