Cooper v Natural Resource Body for Wales

The High Court’s insolvency jurisdiction may permit it to restrain criminal proceedings against a company, but the statutory scheme does not confer jurisdiction to stay proceedings pending in another court. Where the court has power to restrain proceedings, it must balance the orderly administration of the company’s assets and the interests of creditors against the public interest in prosecution. Serious environmental offences, protection of the regulatory regime and wider community concerns may outweigh the financial disadvantage to creditors. Criminal proceedings brought by a regulator are not equivalent to proceedings brought by a creditor to establish a debt and may properly continue despite liquidation.

The applicants were the joint liquidators of Paperback Collection and Recycling Limited, which was in creditors’ voluntary liquidation. The Respondent, Natural Resource Body for Wales, was prosecuting the company and its directors for alleged environmental offences concerning the storage and management of waste.

The applicants sought a stay of the criminal proceedings in the magistrates’ court. The court first considered whether the statutory insolvency jurisdiction permitted a stay of proceedings pending in another court. It then considered, on an assumed basis, whether the proceedings should be restrained or stayed in the exercise of the relevant discretion.

1. Jurisdiction. The application for a stay was dismissed because the court lacked jurisdiction to stay criminal proceedings pending in the magistrates’ court or Crown Court. Sections 112(1) and (2) of the Insolvency Act 1986 gave the court the same relevant powers in a voluntary winding up as in a court winding up, including the statutory power to restrain proceedings. Section 126(1), however, distinguished between a stay, sought from the court in which proceedings were pending, and restraint, sought from the court having jurisdiction to wind up the company.
2. The authorities established that “proceedings” in the statutory insolvency regime could include criminal proceedings. That conclusion was supported by Re Briton Medical and General Life Assurance Life Assurance Association (1886) 32 Ch D 503, Re J Burrows (Leeds) Ltd [1982] 2 AER 882, R v Dickson [1991] BCC 719 and Re Rhondda Waste Disposal Ltd [2001] Ch 57. Those authorities did not establish a High Court power to impose a stay in another court where the statutory language instead provided for restraint.
3. Discretion. If jurisdiction to stay had existed, the court would have refused the application. The relevant principles were closely analogous to those governing leave to commence or continue proceedings against a company in liquidation. The purpose was to protect assets for creditors as a class and prevent individual advantages, but the prosecution was not brought to establish a creditor’s claim and did not interfere with the liquidators’ orderly administration except through the costs and time of defending it.
4. The alleged offences were serious, involved substantial quantities of waste and raised important public-interest concerns. Prosecution supported the environmental regulatory regime, reflected the regulator’s published policy and addressed potential harm to landowners and the community. Those considerations substantially outweighed the disadvantage to creditors. The application was therefore dismissed.