Manolete Partners Plc v Hayward And Barrett Holdings Ltd & Ors

An assignee of company claims cannot use the procedural gateway in the Insolvency Act 1986 unless it is itself a creditor or contributory. Assignment of company claims does not transfer the office of liquidator. Claims under section 239 are insolvency proceedings, but claims under section 423 fall outside that procedure and require a Part 7 claim form. Where such a claim is mistakenly issued as an Insolvency Application, CPR 3.10 permits the court to remedy the procedural error. The discretion is guided by procedural convenience, the overriding objective and the absence of abuse of process. The court may impose payment of the correct issue fee as a condition of continuation.

The Applicant, assignee of causes of action arising from the liquidation of Blackwater Plant Limited, issued an Insolvency Application against connected companies and their alleged directors. The application included transaction avoidance claims and claims vested in Blackwater itself for breach of duty.

Three applications were before the court. The first sought an extension of time to admit evidence. The second, which was dismissed extempore, sought strike-out or summary judgment on the allegation that the fourth Respondent was a de facto director. The reserved third application sought an unless order requiring payment of the issue fee that would have applied to a Part 7 claim. The central issues were whether the assigned company claims could be brought by Insolvency Application and, if not, whether the procedural error could be cured.

The court recorded that the second application had been dismissed because the question whether the fourth Respondent was a de facto director was factual and required fuller investigation. The first application therefore required no determination.

1. Procedural gateways. Rule 1.35 of the Insolvency Rules 2016 permits an Insolvency Application only where the applicant can identify a statutory or rules-based gateway within Parts I to XI of the Insolvency Act 1986. Claims under section 239 fall within Part VI and may be brought in that way. Claims under section 423 fall within Part XVI and are not insolvency proceedings; they require a Part 7 claim form.
2. Assignment and standing. Section 246ZD permits specified insolvency causes of action vested in liquidators or administrators to be assigned. It does not make company claims or the office of liquidator assignable. The Applicant could take the beneficial interest and legal title to the Blackwater Claims, but section 212 permitted an application only by the official receiver, liquidator, creditor or contributory. An assignee of company claims that was none of those persons lacked standing. The distinction was supported by Re Ayala Holdings Ltd (No 2) [1996] 1 BCLC 467 and the reasoning in Mullarkey v Broad [2007] EWHC 3400 (Ch).
3. Procedural regularisation. The Companies Court is part of the High Court and has no special jurisdiction merely by that name. Earlier authorities, including In re Shilena Hosiery Co Ltd [1980] Ch 219, Fabric Sales Ltd v Eratex Ltd [1984] 1 WLR 863, Re Clasper Group Services Ltd (1988) 4 BCC 673 and Re Taunton Logs Ltd (in liquidation) [2021] BPIR 427, supported a discretion under CPR 3.10 to allow a claim wrongly issued as an Insolvency Application to continue where it arose from the liquidation. The court rejected any general practice overriding the Rules. Procedural convenience, sensible and economical case management, and the overriding objective were relevant. Abuse of process would weigh against regularisation, but abuse was not to be assumed.
4. Order. The assigned Blackwater Claims should have been commenced by Part 7 claim form. They were permitted to continue subject to payment of the prevailing Part 7 issue fee within seven days of hand-down. The court criticised the resulting need for different procedures and lists but considered the fee condition appropriate.