Wallace v Wallace

The power under section 236(3) of the Insolvency Act 1986 to require information and documents is free-standing. It may be exercised against a person abroad, even where no summons is issued under section 236(2). The court must consider the foreign element and ask whether the respondent has a sufficient connection with England and Wales for the order to be just and proper. The liquidator’s reasonable need for the material and the burden imposed on the respondent are relevant. A company’s foreign-based bookkeeper, who holds its books and records, may have a sufficient connection. A formal error in the service certification does not invalidate service where no permission was required and the defect caused no prejudice.

The liquidator of Carna Meats (UK) Limited applied for an order requiring George Wallace, the company’s former bookkeeper resident in the Republic of Ireland, to deliver company books, records and information. The company was in compulsory liquidation in England and Wales, and its accounts indicated potentially substantial debts. Mr Wallace did not appear or provide the requested material.

The application raised questions about service out of the jurisdiction and the territorial scope of section 236 of the Insolvency Act 1986. The court also considered the effect of the EU Insolvency Regulation 2000 on the English court’s jurisdiction and the liquidator’s powers.

1. Order granted. The court ordered Mr Wallace to provide the requested books, records and information, allowing 42 days for compliance.
2. The court held that section 236(3) confers a free-standing power to require a person falling within section 236(2)(a)–(c) to provide an account of dealings or produce documents and information. Its operation is not dependent on a summons or on the attendance-enforcement machinery in sections 236 and 237. The reasoning in Official Receiver v Norriss was adopted, while the contrary analysis in In re MF Global UK Ltd (No 7) was not followed: [2019] EWHC 2503 (Ch) [46]–[54].
3. Although English statutes are presumed not to have extraterritorial effect, section 236(3) is materially different from a power compelling attendance before the court. It may extend to persons abroad. The court must consider whether the respondent is sufficiently connected with England and Wales for the order to be just and proper, and must weigh the liquidator’s reasonable need against the burden and any foreign-law risks: [48]–[54].
4. The company’s winding-up fell within the EU Insolvency Regulation 2000. The English court’s jurisdiction to open the proceedings, recognition of the proceedings in Ireland, the liquidator’s ability to exercise English-law powers in another Member State, and recognition of judgments supported the order: [20]–[21], [55]. Mr Wallace’s role as bookkeeper and his presumed possession of documents gave him a strong connection with the company and the jurisdiction: [55].
5. Service out was permitted without permission under the combined effect of Schedule 4 to the Insolvency Rules 2016, the applicable insolvency Practice Direction and CPR 6.33(3). The Form N510 certification incorrectly relied on CPR 6.33(1), but this was a minor formal irregularity causing no prejudice and did not invalidate service under rule 12.64 of the Insolvency Rules 2016: [22]–[26].
6. The ordinary section 236 discretion was satisfied. The requested material was reasonably required to investigate and recover company assets, and Mr Wallace had not shown that compliance would be unnecessarily or unreasonably burdensome. His asserted debt was a matter for proof in the liquidation, not a reason to withhold the company’s records: [14]–[17].