In the matter of Rodus Developments Limited (in administration)

An equitable charge created by a company must be registered within the statutory period. If it is not registered, it is void as security against the company’s administrators and creditors. This applies even where the charge relates to future property and takes effect only when the company later acquires that property.

Where direct service on a foreign respondent is impracticable, the court may order service by an alternative method under the Insolvency Rules 2016 and CPR 6.15. The existence of a treaty for judicial assistance does not remove that power. Final substantive relief may be granted without an adjourned hearing where the respondent has had ample notice, has failed to engage, and delay would prejudice an administration.

Joint administrators of a property development company applied for permission to serve applications out of the jurisdiction on a Dubai company. The applications concerned directions under paragraphs 63 and 71 of Schedule B1 to the Insolvency Act 1986, and challenged a purported equitable charge over the company’s English properties.

The respondent claimed the charge under a facility agreement but had not registered it at Companies House or HM Land Registry. Attempts to serve the respondent at its stated Dubai address failed. Its solicitors had corresponded about the charge, but declined to accept service.

The issues were whether permission to serve out was required and justified, whether alternative service should be ordered, and whether the court should grant final relief declaring the charge void and requiring cancellation of the pending unilateral notice.

1. Permission to serve out. The relevant gateways were satisfied because the agreement was governed by English law, the applications concerned property in England and enactments, and the respondent had submitted to the administration process. The administrators showed reasonable prospects of success, and England was the proper place for the claims.
2. Validity of the charge. Although the company did not own the properties when the facility agreement was entered into, an equitable charge over future property could arise when the company acquired them. Any such charge was nevertheless created by the company and required registration within the period allowed by sections 859A and 859E of the Companies Act 2006. Since it was never registered, it was void as security against the administrators and creditors under section 859H.
3. Alternative service. Direct service was impracticable. The respondent’s stated address no longer existed, no alternative Dubai address could be identified, and its solicitors continued to act in relation to the dispute while refusing service. Retrospective service by post and email on those solicitors was therefore ordered under paragraph 1(5) of Schedule 4 to the Insolvency Rules 2016 and CPR 6.15(2). The UAE Treaty did not oust the court’s power to order alternative service.
4. Final relief. An adjournment was unnecessary. The respondent had ample notice, had failed to provide any substantive answer, and its conduct was prejudicing the administration. The court declared the equitable charge void, declared that the unilateral notice application had been made without reasonable cause, and ordered its cancellation and vacation. The paragraph 71 application was stayed pending further order.
5. The respondent was ordered to pay the administrators’ costs.