R (on the application of Palmer) v Northern Derbyshire Magistrates’ Court and another

An administrator appointed under the Insolvency Act 1986 is not an officer of the company for the purposes of section 194(3) of the Trade Union and Labour Relations (Consolidation) Act 1992. Whether a person is an officer is determined by a constitutional test. The person must hold an office within the body corporate’s constitutional structure and be similar in that respect to a director, manager or secretary.

Responsibility for managing the company’s business, even extensive day-to-day control, does not by itself confer that status. The statutory language cannot be expanded on policy grounds to cover everyone responsible for corporate management. Parliament could achieve that result by referring expressly to persons concerned in management.

The appellant was one of three joint administrators of a company. Employees were dismissed shortly after the administrators’ appointment, but notice of the proposed redundancies was not given promptly to the Secretary of State. The appellant was prosecuted under section 194(3) of the Trade Union and Labour Relations (Consolidation) Act 1992 on the basis that an administrator was an officer of the company.

A district judge ruled that an administrator was an officer. The Divisional Court dismissed the appellant’s judicial review claim in [2021] EWHC 3013 (Admin); [2022] ICR 531. The issue before the Supreme Court was whether an administrator appointed under the Insolvency Act 1986 fell within the expression “director, manager, secretary or other similar officer of the body corporate” in section 194(3).

1. Appeal allowed unanimously. Lord Richards, with whom Lord Reed, Lord Hodge, Lord Burrows and Lady Rose agreed, held that an administrator appointed under the Insolvency Act 1986 is not an officer of the company within section 194(3) of the Trade Union and Labour Relations (Consolidation) Act 1992. The district judge’s ruling was quashed.

2. The Insolvency Act 1986, which created and governs administration, consistently distinguishes an administrator from an officer of the company. Section 251 does not expressly include administrators in its inclusive definition of an officer. Section 212(1), the former administration provisions and Schedule B1 separately identify administrators and company officers. This statutory scheme provides a clear indication that an administrator was not classified as a company officer.

3. The correct meaning of “officer” is determined by an essentially constitutional test. The question is whether the person holds an office within the constitutional structure of the body corporate, as directors, managers and secretaries conventionally do. The words “other similar officer” reinforce that meaning and do not extend liability to every person exercising senior managerial functions.

4. A functional test based on day-to-day management and control was inconsistent with the statutory language and context. Parliament could readily have referred to any person concerned in the management of the body corporate. Its use of that wider formulation elsewhere showed the significance of its absence from section 194(3). Section 194(4), which expressly extends liability to members managing certain bodies corporate, also weighed against implying a general managerial test.

5. The mere fact that an administrator manages the company’s affairs, business and property, holds the office of administrator and is an officer of the court does not make the administrator an officer of the company. The earlier decisions adopting that reasoning were wrongly decided. The Court of Appeal’s conclusion in Schofield v Smith that administrators were company officers was also wrong, although its result was correct because administrators were agents of the companies.

6. Policy concerns could not justify extending the criminal provision beyond its language. The potential absence of personal liability for an administrator did not permit the court to fill a perceived enforcement gap. The company remained subject to section 194(1), and the special-circumstances provision in section 193(7) addressed cases where compliance was not reasonably practicable.

1. United Kingdom Supreme Court: The appeal was allowed unanimously. The court quashed the ruling that the appellant, as administrator, was an officer of the company within section 194(3) of the Trade Union and Labour Relations (Consolidation) Act 1992.

2. Divisional Court of the High Court: In [2021] EWHC 3013 (Admin); [2022] ICR 531, the court upheld the district judge’s ruling and dismissed the judicial review claim.

3. Northern Derbyshire Magistrates’ Court: On 29 May 2018, District Judge Andrew Davison ruled that an administrator was an officer of the company within section 194(3).