JCAM Commercial Real Estate Property XV Ltd v Davis Haulage Ltd

Under paragraphs 26–28 and 44(4) of Schedule B1 to the Insolvency Act 1986, a company or its directors may give and file a notice of intention to appoint an administrator only where they have a settled and unconditional intention to make that appointment. A conditional intention, such as appointing an administrator only if a proposed CVA fails, is insufficient. The interim moratorium is tied to the notice and protects the company while a qualifying floating charge holder decides whether to appoint, or pending the notified appointment. An invalid notice cannot invoke the moratorium. This construction prevents a company from obtaining indirectly the moratorium which the statutory regime reserves to eligible companies proposing a CVA.

The appellant, the landlord of premises occupied by the respondent company, sought removal from the court file of a notice of intention to appoint an administrator filed on 4 March 2016. The company had substantial rent arrears and was proposing a company voluntary arrangement while considering administration as a contingency. The High Court held that a settled intention to appoint an administrator was unnecessary and refused the substantive challenge, in EWHC 772 (CH). Permission to appeal was granted. The central issue was whether a company or its directors could trigger the interim moratorium under Schedule B1 to the Insolvency Act 1986 while treating administration as only a conditional or alternative outcome.

The appeal was allowed. The copy of the fourth notice of intention to appoint an administrator, filed on 4 March 2016, was ordered to be removed from the court file.

1. Meaning of the statutory notice. Lord Justice David Richards, with Lord Justices Flaux and Jackson agreeing, held that, in paragraph 26(1) of Schedule B1 to the Insolvency Act 1986, proposes and intends are synonyms. The repeated references to a notice of intention in paragraphs 26 to 28, together with the relevant Insolvency Rules 1986 and prescribed forms, confirm that the notice regime requires an intention to appoint.
2. Purpose of the notice and moratorium. Notice is required to give a qualifying floating charge holder, or a person entitled to appoint an administrative receiver, the opportunity to exercise a prior appointment right. Filing the notice protects the company and its assets while that person decides whether to appoint, or pending the notified appointment.
3. Settled intention required. At the time of giving and filing the notice, the company or its directors must have a settled and unconditional intention to appoint an administrator. A proposal to appoint only if a CVA fails, or as one of several possible outcomes, does not satisfy paragraph 26.
4. Wider statutory context. The construction had to reflect the wider insolvency regime. The moratorium available to an eligible company proposing a CVA under section 1A and Schedule A1 to the Insolvency Act 1986 was deliberately limited. The alternative construction would have provided an indirect route to a moratorium for companies outside that regime.
5. Effect of invalidity. Without the statutory precondition, the notice was invalidly given, the copy was invalidly filed, and the interim moratorium was not validly invoked. The court observed that such filing might technically constitute an abuse of process, but that characterisation was unnecessary because invalidity provided the sufficient ground for relief. A conditional proposal does not entitle or oblige a company or its directors to give the notice.

1. Court of Appeal (Civil Division): allowed the appeal and ordered removal of the copy of the fourth notice from the court file. [2017] EWCA Civ 267.
2. High Court of Justice, Chancery Division: held that a settled intention to appoint an administrator was unnecessary and granted permission to appeal. EWHC 772 (CH).