PROPERTY SERVICES LONDON LIMITED v LAVERSTOCK MANAGEMENT CORPORATION LIMITED (in administration)

Where a company is in administration, an injunction against the company or its property constitutes legal process for the purposes of the statutory moratorium. It cannot be instituted or continued without the administrator’s consent or the court’s permission.

Actual or presumed ignorance of the administration does not cure the irregularity. The court should not continue an injunction, even for a short period, where no application for permission has been made. An injunction obtained under a material misapprehension may therefore be discharged once the irregularity is identified.

The claimant obtained an injunction restraining the defendant from marketing or selling four mortgaged properties. The defendant had entered administration before the injunction was sought, but that fact was not disclosed to the court. The injunction was granted on the further misapprehension that the defendant was aware of and effectively consenting to it.

LendInvest and Allsop LLP, interested parties connected with the mortgages and receivership, applied to discharge the injunction and sought further declarations and orders concerning the sale contracts and property documents. The claimant sought an adjournment. The central issue decided immediately was whether the injunction could remain in force without permission under the administration moratorium.

1. Adjournment and immediate relief. The application was adjourned as to the declarations, document delivery, restraint orders and costs. The application to discharge the injunction was dealt with immediately because the claimant had long been aware of the administration and the irregularity, and had not addressed it.
2. Effect of the moratorium. Under paragraph 43(6) of Schedule B1 to the Insolvency Act 1986, legal process may not be instituted or continued against a company in administration or its property except with the administrator’s consent or the court’s permission. The injunction was legal process and was therefore irregular when granted and while continued without permission.
3. Knowledge and culpability. The court assumed, for present purposes, that the claimant’s solicitor did not know of the administration when applying for the injunction. That did not alter the injunction’s irregular character. The court made no finding on the circumstances in which it had been obtained, but considered that the claimant should have notified the court promptly after learning of the administration and sought permission for the injunction to continue.
4. No temporary continuation. The court would not condone continuation of the breach for even a short period pending a return hearing. No application for permission had been made, and continuation would itself contravene paragraph 43(6).
5. The adjournment was refused and the injunction granted on 3 August 2021 was discharged. The remaining relief was directed towards a three-day Part 8 trial, with evidence and procedural directions to follow. The juridical basis of the proposed declaration that the sale contracts were void remained unclear.