Williams & Anor v Carraway Guildford (Nominee A) Ltd & Ors

On an application to strike out or obtain summary judgment, the court must assume that pleaded facts are true and should strike out only where the claim is certain to fail. Novel or developing questions of law should ordinarily be resolved after findings of fact. A claim involving a small financial sum is not necessarily an abuse of process. The proper question is whether the claim can be adjudicated by a proportionate procedure. Under section 6 of the Insolvency Act 1986, it was reasonably arguable that the court could revoke a company voluntary arrangement after termination and could order repayment of fees or remuneration. The applicants therefore retained a legitimate interest in pursuing the challenge where revocation might affect lease variations, liability exclusions, indemnities, recoveries and costs.

The landlords of Regis UK Limited challenged the creditors’ approval of a company voluntary arrangement under section 6 of the Insolvency Act 1986, alleging unfair prejudice and material irregularities. The company later entered administration and the CVA consequently terminated. The supervisors applied urgently for abridgment of time, strike out of the challenge against them, or summary judgment.

The application raised whether the court could revoke a terminated CVA, order repayment of supervisors’ fees or remuneration, and grant relief where the practical benefit of revocation was disputed. The central issue was whether the landlords’ pleaded claims had reasonable grounds and a real prospect of success.

1. Application dismissed. Time for service was abridged, but the supervisors’ applications for strike out and summary judgment were refused.
2. For strike-out purposes, pleaded facts had to be assumed to be true. Strike out was inappropriate unless the claim was bound to fail. Novel issues in a developing area of law should generally be decided after findings of fact. The summary judgment test did not justify determining issues requiring fuller argument.
3. It was properly arguable that section 6(4) of the Insolvency Act 1986 was not expressly limited to CVAs that remained in force. The absence of authority establishing that revocation became impossible after termination, together with the possible practical effects of revocation, meant that the issue should be decided at trial.
4. It was also properly arguable that section 6(6) permitted repayment of supervisors’ fees or remuneration as “things done” under the CVA. The analogy with the possible deprivation of an office-holder’s recoupment rights for misconduct or work conferring no benefit supported leaving the issue to trial.
5. The landlords had a legitimate interest in revocation. Revocation might affect lease variations, contractual exclusions of liability, the supervisors’ indemnity and ability to prove in the administration, and the recovery available to creditors. These were sufficient to give the claim a meaningful purpose.
6. The claim was not an abuse of process. Even if the dispute had been confined to repayment of £45,000, the court should consider whether a proportionate procedure could be adopted rather than strike out the claim.
7. The court declined to determine unresolved questions concerning the effect of the CVA’s clauses, the parties bound by any decision, and possible repayment or costs consequences. Those matters were left for the trial judge.