IN THE MATTER OF EMERALD MEATS (LONDON) LIMITED

A court may review, rescind or vary an insolvency order only cautiously. The applicant must show exceptional circumstances involving a material difference from those previously before the court.

A serious concession or undertaking, made after legal advice to address concerns about vexatious or oppressive litigation, will ordinarily be upheld. Departure requires a cogent explanation and must be justified by the overriding objective.

At the assignment stage, the court need only identify a potentially arguable claim that is not frivolous or vexatious. A doubtful claim may therefore be assigned, subject to tightly drawn terms and without pre-empting a later summary judgment application.

John McCarthy applied for directions requiring the liquidators of Emerald Meats (London) Ltd and Emerald Properties (London) Ltd to assign causes of action against Ivor Marshall. The proposed claims concerned the alleged transfer of the companies’ business, meat-import quota rights, and stock or sale proceeds.

The application followed earlier orders imposing a notification deadline, a decision by Deputy ICC Judge Middleton refusing assignment of the business-transfer and quota claims, and an appeal judgment which recorded Mr McCarthy’s disavowal of those claims if his other principal assignments were preserved.

The issues were whether the earlier orders and disavowal barred the claims, whether the orders should be reviewed under the insolvency rules, and whether the proposed claims were frivolous or vexatious.

1. Business-transfer and quota claims. The earlier orders, the refusal by Deputy ICC Judge Middleton, and the subsequent disavowal together barred renewed applications for assignment of those claims. The rule in Henderson v Henderson would ordinarily prevent the issue being reopened. The later order allowing further claims was construed, or alternatively reviewed, so that it did not re-admit claims already dismissed and deliberately abandoned.
2. Review jurisdiction. Under Insolvency Rule 12.59(1), the court could review, rescind or vary its order, but the jurisdiction had to be exercised cautiously. The applicant had to show exceptional circumstances involving a material difference from the circumstances previously before the court. The circumstances relied on did not satisfy that test.
3. Disavowal. The disavowal was a serious concession, made after an adjournment for legal advice and intended to remove concerns about vexation and oppression. Applying the overriding objective, and the principle of finality in litigation, justice required Mr McCarthy to be held to it. No sufficiently cogent explanation justified resiling from it. The principles concerning concessions and undertakings in AM (Iran) v Secretary of State for the Home Department and Placito v Slater were applicable.
4. Stock/cash claim. This claim had not previously been dismissed or disavowed and fell within the later order permitting new claims. Although doubtful and insufficient at that stage to establish a prima facie fraud, the unusual stock figures provided a potentially arguable basis for further investigation. The claim was not frivolous or vexatious. It could be assigned, confined to the period 2008 to 2010. A claim that might fail on the evidence was better addressed by summary judgment.
5. The business-transfer and quota claims were not assigned. The stock/cash claim was assigned on terms equivalent to those applying to the previously permitted claims, and no other claims could be investigated or assigned.

The judgment describes earlier insolvency proceedings and an appeal concerning the companies’ liquidations and assignment of causes of action. The present application was made under liberty to apply in the earlier order.

• High Court: the earlier appeal judgment dismissed Mr Marshall’s appeal subject to limited variation and prescribed the claims which could be assigned.
• High Court (present judgment): assignment of the business-transfer and quota claims was refused. Assignment of the stock/cash claim was directed, subject to temporal and other limitations.