Jackson & Anor v Baker Tilly & Anor

Sections 235 and 236 of the Insolvency Act 1986 confer wide inquisitorial powers. The court may order production of documents reasonably required by liquidators to investigate a company's affairs and discharge their functions. The power is not confined to material needed merely to reconstitute the company's state of knowledge, nor is it governed by the narrower rules of ordinary litigation disclosure. The applicant must show a reasonable requirement. The court must then balance the likely importance of the information against unnecessary, unreasonable or oppressive burdens on the respondent. The liquidators' evidence and lack of company records are relevant, and a request need not establish absolute necessity or be pleaded with discovery-level detail. Confidentiality concerns may justify safeguards, including redaction and an opportunity for affected third parties to object.

The joint liquidators of Alocasia Limited applied under sections 235 and 236 of the Insolvency Act 1986 for documents, information and a witness statement from the company's former auditors, Baker Tilly and Baker Tilly UK Audit LLP. The company had entered voluntary liquidation with a substantial deficiency following disputed tax arrangements. The liquidators had limited records and sought audit files, correspondence, papers and advice concerning the company's accounts, tax affairs and group dealings.

The respondents argued that the request was too broad, oppressive and connected with separate proceedings against the company's former directors. Issues also arose concerning the confidentiality of documents belonging to Alocasia, the Minton Group and the additional parties. The central questions were whether the liquidators had shown a reasonable requirement and whether the proposed order was unreasonable, unnecessary or oppressive.

1. Application granted in part and further directions given. The court accepted that the liquidators had shown a reasonable requirement for documents relating to the company's accounting records and possible tax advice. Their evidence established a material lack of information, and the documents indicated prima facie involvement by the respondents in tax matters.
2. The power under section 236 is wide but extraordinary. Following British & Commonwealth Holdings Plc v Spicer and Oppenheim [1993] AC 426, it extends beyond documents needed simply to reconstitute the company's knowledge. The court must balance the office-holder's reasonable requirements against any unnecessary, unreasonable or oppressive burden.
3. The liquidators' purpose was not objectionable merely because the material might assist separate claims. Section 236 inquiries are not constrained by the pleaded issues or anti-fishing rules applicable to ordinary disclosure. A reasonable requirement, rather than absolute need, was sufficient. The court gave substantial weight to the views of these experienced liquidators and did not require detailed evidence equivalent to a discovery application.
4. The volume of material did not itself make production oppressive. The respondents were a professional firm with categorised files, making the exercise achievable. The relevant categories principally concerned audit materials for 2005 to 2010 and correspondence, papers and advice concerning HMRC and tax matters.
5. The application for witness examination was adjourned. Production of documents and related matters were also subject to further submissions. The additional parties and potentially the Minton Group were given 21 days to raise confidentiality objections. Alocasia documents could be produced, with redaction or other safeguards considered for documents belonging to other group companies.

This was a first-instance application in the High Court (Chancery Division). The judgment describes the application procedure and related proceedings under the Insolvency Act 1986, but gives no appellate history.