Ingram (Liquidator of Msd Cash And Carry Plc) v Singh & Ors

Interest on claims concerning preferences or transactions at an undervalue is awarded, if at all, under section 35A of the Senior Courts Act 1981. It does not form part of the restorative order available under the Insolvency Act 1986, and ordinarily runs from the date of the winding-up order. The rate is a matter for broad judicial evaluation. The court may consider the claimant’s general attributes and the relevant commercial or insolvency context. In this case, the appropriate rate was the Revenue and Customs default rate for unpaid VAT. Costs remain discretionary, with overall success being the primary consideration, but exceptionally unreasonable conduct may justify indemnity costs. Case management may impose a time limit for an office-holder’s application for directions concerning an inquiry.

The liquidator of MSD Cash & Carry plc succeeded at trial on various claims arising from the company’s insolvent liquidation. The substantive judgment, [2018] EWHC 1325 (Ch), left consequential issues for determination.

This judgment addressed the date and rate of interest on the successful preference and other claims, the timing and scope of an inquiry, and the parties’ costs. The central issues were whether interest could be awarded under the restoration provisions of the Insolvency Act 1986, what rate should apply, how the inquiry should be managed, and how costs should reflect the parties’ overall success and conduct.

1. Interest on a preference claim, and similarly on a transaction-at-an-undervalue claim, falls to be awarded, if at all, under section 35A of the Senior Courts Act 1981. It does not form part of restoring the company to the position it would have occupied absent the offending transaction. Section 239(3) and section 241(1)(d) of the Insolvency Act 1986 did not provide an independent basis for interest.

2. Interest ran from the winding-up order on 16 January 2012, when the cause of action accrued, rather than from the date of the preference. The authorities relied on did not decide the earlier-starting-date issue.

3. The rate of interest was to be approached broadly, applying the guidance in Carrasco v Johnson [2018] EWCA Civ 87. The fair rate for a liquidator claiming for an insolvent company whose insolvency was caused by unpaid VAT was the Revenue and Customs default rate on unpaid VAT. Interest was therefore awarded at 3% simple interest from the date of winding-up.

4. As a matter of case management, the liquidator’s application for directions concerning the inquiry had to be made no earlier than 1 October 2018 and no later than 16 July 2020. On taking the account, the court was also to determine whether any consequential payment order was statute-barred.

5. Applying the principles derived from HLB Kidsons v Lloyds Underwriters [2007] EWHC 2699 (Comm), the liquidator was the overall successful party against Mohinder Singh, Surjit Singh Deol and Dale Wholesale Ltd. The costs were payable on the indemnity basis. Mohinder was liable for 100% of the costs, while Deol and Dale were liable for 75%. No order for costs was made in favour of Kuman or Basi. Payments on account were ordered in the sums of £400,000 against Mohinder and £300,000 against Deol and Dale.

This was a consequential first-instance judgment following the substantive trial judgment in the same proceedings, reported at [2018] EWHC 1325 (Ch). No appeal history is stated.