Jeremy Robert Webb & Anor v Eversholt Rail Limited & Anor (Re Eversholt Rail (365) Limited)

Applications under sections 235 and 236 of the Insolvency Act 1986 require evidence that the office-holder reasonably requires the information or documents sought. The court’s discretion is broad, but it is exercised by balancing that reasonable requirement against the burden or oppression imposed on the respondent.

A liquidator is not entitled simply to reconstruct all records held by a third party, or to obtain every document relating to the insolvent company. Requests must be sufficiently focused and supported by evidence explaining their relevance and necessity. The court need not assess inconvenience or oppression where reasonable requirement has not first been established. Legal professional privilege is not abrogated by sections 235 and 236.

The joint liquidators of Eversholt Rail (365) Limited applied under sections 235 and 236 of the Insolvency Act 1986 for orders requiring Eversholt Rail Limited and its solicitors, Norton Rose Fulbright LLP, to provide wide categories of documents and information concerning the company.

The company’s records were held by Eversholt Rail Limited, which had provided administrative services to it. The liquidators sought documents to reconstitute the company’s records and investigate its pre-liquidation affairs, including advice and documents held by the solicitors. The respondents had provided substantial material and offered to respond to focused requests, but resisted the blanket requests. The central issue was whether the liquidators had shown a reasonable requirement for the documents sought.

1. The applications against both respondents were dismissed. The statutory powers under sections 235 and 236 of the Insolvency Act 1986 are intended to enable an office-holder to obtain information needed to perform his functions. They do not confer an unqualified entitlement to all documents relating to the company.

2. The court has a general discretion under section 236. It must balance the office-holder’s reasonable requirement for information against the burden or oppression imposed on the person required to provide it. The office-holder’s view attracts considerable weight, but is not decisive. The first question is whether a reasonable requirement has been established.

3. The liquidators’ requests for everything held by Eversholt Rail Limited or Norton Rose Fulbright LLP relating to the company were fundamentally misconceived. The evidence consisted largely of assertions that further records existed and would assist investigations. It did not explain why the very broad categories, extending over long periods and without temporal limits, were reasonably required.

4. Because reasonable requirement had not been shown, there was no need to undertake the second-stage assessment of inconvenience or oppression. A liquidator must work within the circumstances in which the company operated and cannot use sections 235 and 236 simply to place himself in the position he would have occupied if the company had maintained segregated records.

5. The court accepted the evidence that Norton Rose Fulbright’s client was Eversholt Rail Limited. The material before the court did not establish a specific category of documents attracting joint-interest privilege. In any event, the breadth of the order sought and the absence of evidence demonstrating reasonable requirement were sufficient to dispose of the application. Sections 235 and 236 do not abrogate legal professional privilege.