Williams v Glover & Anor

A bare statutory right to appeal a tax assessment is not property within Insolvency Act 1986, s 436, and cannot be assigned by a liquidator under Schedule 4, para 6. The right is not a chose in action because it is conferred by statute and is not claimed or enforced by action. Different considerations may apply where an appeal right is incidental to an assignable property right or where the underlying liability can be novated.

The liquidator of GP Aviation Group International Ltd sought directions concerning outstanding Corporation Tax appeals against HMRC discovery assessments. The former directors, who faced misfeasance proceedings, sought an order requiring the liquidator to assign the appeal rights to them. The issues were whether a statutory right to appeal was company property, whether it could be sold under Schedule 4 to the Insolvency Act 1986, whether assignment would be effective, and whether it should be sanctioned. The court also considered a possible stay of the misfeasance proceedings.

1. The application concerned directions under s 167(3) of the Insolvency Act 1986. A liquidator must take control of the company’s property and things in action under s 144. Schedule 4, para 6 permits the sale of company property, while para 4 permits the liquidator to bring or defend proceedings.
2. A cause of action is a chose in action and may be assigned as company property. That principle does not make the remedy used to enforce a chose separately assignable. The right to a remedy is incidental to ownership of the underlying chose.
3. A bare right to appeal a tax assessment is not property within s 436. It is conferred by statute, need not be claimed or enforced by action, and is not independently capable of being turned into money. The liability itself could not ordinarily be assigned, so assigning the appeal right alone would be analogous to assigning a remedy without the underlying right.
4. Heath v Tang was consistent with this analysis. A bankrupt loses standing to pursue an appeal concerning assets or liabilities vested in the trustee because the bankrupt no longer has an interest in the estate, not because the bare appeal right vests as property in the trustee. The same reasoning applies to a company in liquidation: only the office-holder may exercise the company’s appeal right.
5. The court declined to decide the remaining questions concerning the power to sell, effectiveness of assignment and propriety of assignment. It nevertheless stated that, absent the liquidator’s agreement, assignment would not have been sanctioned because the respondents’ interests could conflict with those of creditors and the office-holder might lose control over conduct, settlement, penalties, interest and costs.
6. The liquidator alone was entitled to decide whether and how long to pursue the appeals. He could accept funding from the respondents only if satisfied that doing so was in the best interests of creditors generally. The proposed stay of the misfeasance proceedings was left for further argument.