Secure Mortgage Corporation Ltd & Anor v Harold & Ors

This judgment concerns consequential matters following the court's Main Judgment of 28 May 2020 in which the appointment of Mr Harold as administrator was declared void. The judge confirmed that H Commercial Capital Limited (HCC) had been properly joined as a party because it was potentially affected by the outcome of the proceedings. The court declined to make wide ancillary declarations beyond the relief specifically sought, but adjourned applications for injunctive and mandatory relief (delivery up of books and records and related relief) for further evidence and hearing.

The court directed procedural steps to enable an application under section 1096 of the Companies Act 2006 to be determined on paper, requiring the Applicants to specify precisely what is to be removed from the register. It refused to make open-ended inquiries or accounting orders without further evidence. Finally, the court ordered that the Respondents pay the Applicants' costs on the indemnity basis because of the Respondents' conduct in the litigation and made an interim payment on account of costs in the specified sum of £75,492.30.

This is a first-instance judgment dealing with matters consequential to the court's Main Judgment dated 28 May 2020 ([2020] EWHC 1364 (Ch)) which declared void the appointment of Mr Peter John Harold as administrator of Secure Mortgage Corporation Limited (SMC). The present hearing considered a number of consequential issues including: the effect of a subsequent director-led appointment of new administrators, the standing of H Commercial Capital Limited (HCC) in the proceedings, the content of recitals to the consequential order, whether additional declarations should be made, injunctive and mandatory relief, rectification of the register of companies under section 1096 of the Companies Act 2006, and the parties' costs.

• Nature of the application: consequential directions and further relief following the Main Judgment, including an application for further relief by the Applicants (injunction restraining Mr Harold from holding himself out as administrator; delivery up of SMC's books, records and property; and other consequential relief), and an application under section 1096 for removal of entries from the companies register.
• Issues framed: (i) whether HCC had standing to be a party; (ii) the appropriate form of the recitals and declarations in the consequential order; (iii) whether the court should grant injunctive relief, order inquiries or accounts, or direct delivery up of records at this stage; (iv) the terms of any order under section 1096; and (v) liability for costs and whether costs should be awarded on the indemnity or standard basis and whether an interim payment should be ordered.
• Court's reasoning and disposition: the judge held that HCC could properly be joined because it was potentially affected by the outcome and might assert priority under an earlier debenture. The court refused to grant broad open-ended inquiries or accounting orders at this stage because those remedies had not been properly pleaded or supported by evidence and it would be disproportionate to require detailed satellite evidence against the Overriding Objective. The applications for discrete relief (an injunction and delivery up) were adjourned for further evidence and a three-hour hearing on a date after 17 August 2020; the Applicants were ordered to file particulars and supporting witness statements, and the Respondents to file evidence in response. For the section 1096 claim the Applicants were directed to specify with particularity the register entries to be removed so that the Court could determine that application on paper. The judge awarded the Applicants their costs as the successful parties, ordered costs to be subject to detailed assessment on the indemnity basis because the Respondents' pre- and post-issue conduct was out of the norm, and ordered an interim payment on account of costs of £75,492.30.

The judgment also records the appointment, made on 2 June 2020 by SMC's director, of new administrators (Messrs Avery-Gee and Richardson) and notes that their appointment has not been challenged in these proceedings; the court declined to pronounce on the validity of that new appointment in this judgment.

This is a first-instance disposition of consequential matters. The court (HHJ Halliwell) ruled that H Commercial Capital Limited was properly joined as a party; declined to grant broad inquiries or accounting orders without further evidence; adjourned discrete applications for an injunction restraining Mr Harold from holding himself out as administrator and for delivery up of SMC’s books, records and property for a further hearing (to be supported by specified witness statements and particulars); directed the Applicants to particularise an application under section 1096 Companies Act 2006 so the Court can consider rectification of the register on paper; and ordered the Respondents to pay the Applicants’ costs on the indemnity basis with an interim payment of £75,492.30. The court therefore implemented the consequential New Order as set out in the judgment.