Kahn & Ors v Whirlpool (UK) Ltd & Anor

Section 236 of the Insolvency Act 1986 has a broad jurisdictional scope. Documents held by third parties may fall within the jurisdiction where they have some connection with the company’s business or affairs and are relevant to the office-holder’s statutory functions. The jurisdiction permits production of documents, including electronic documents, but does not permit an order for information disguised as document production. Information must be obtained through attendance, interrogatories or affidavits in accordance with the Insolvency Rules 1986.

The court must balance the office-holder’s reasonable requirements against any unnecessary or unreasonable burden on the respondent. A request need not identify particular documents if its subject matter is adequately described. The order was made because the information was reasonably required to investigate a possible cartel damages claim and the likely benefit substantially outweighed the burden.

The joint liquidators of Comet Group Limited applied under section 236 of the Insolvency Act 1986 for information and documents from Whirlpool (UK) Limited and Embraco Europe S.R.L. Comet had been supplied with refrigerators containing compressors supplied within the Whirlpool group. The application followed a European Commission decision finding that Embraco and Whirlpool SA had participated in a refrigeration-compressor cartel.

The liquidators sought sales data, input-cost data and pricing-methodology documents to investigate whether Comet had suffered recoverable loss and whether proceedings should be brought. The respondents challenged both jurisdiction and discretion. The central issues were whether the requested material related sufficiently to Comet’s affairs, whether section 236 authorised orders for information, whether the classes of documents were sufficiently described, and whether production would be oppressive or confer an unfair litigation advantage.

1. Application granted. The court ordered production of the documents sought, subject to amendments converting requests for data into requests for documents containing that data and deleting the request for underlying individual input-cost information.
2. Section 236 should not be construed narrowly. In a cartel damages investigation, prices charged to other customers could bear directly on Comet’s business and affairs. Material having some connection with those affairs and relevant to the liquidators’ statutory functions fell within the jurisdiction.
3. The jurisdiction did not extend to an order simply requiring information to be supplied. Sections 236 and 237 of the Insolvency Act 1986, together with Part 9 and rule 9.2 of the Insolvency Rules 1986, provided the proper mechanisms for obtaining information: attendance before the court, interrogatories or affidavits. A document-production application could not be used as a disguised information request.
4. The expression books, papers or other records included documents held electronically. A schedule did not need to identify particular documents where the applicant could not know their identity and had adequately described them by subject matter. That issue affected discretion rather than jurisdiction.
5. The governing discretion required a careful balance between the liquidators’ reasonable requirements and the avoidance of an unnecessary or unreasonable burden on the respondents. The court considered the liquidators’ evidence, the asymmetry of information, the acknowledged difficulties of proving causation in cartel damages claims, the respondents’ status as third parties, the potential litigation advantage, jurisdictional uncertainty and the asserted burden and cost of production.
6. The liquidators had established that they reasonably required the documents to perform their functions. The respondents’ evidence of burden was inadequate, and their failure to engage constructively with requests for information was relevant. The likely benefit of the order substantially outweighed the likely burden.