Asertis Limited & Anor v Sean Adrian Melhuish & Ors

Documents obtained by a liquidator under compulsory insolvency powers are subject to an implied, qualified duty of confidentiality. The duty does not prevent disclosure where statute requires or authorises it, or where disclosure is necessary for the proper performance of the liquidation. An office-holder may disclose such material to an assignee where that disclosure facilitates the realisation of an assigned cause of action and serves the insolvent estate, but the assignee does not automatically acquire an unrestricted right to use it. Permission to use confidential material in subsequent litigation will ordinarily be required and remains fact-sensitive. The court should balance the interests of the insolvent estate and the persons whose private information was obtained, including by redaction or other safeguards.

The liquidator of Solstice (SW) Limited assigned causes of action against former officers to Asertis Limited. In investigating the company’s affairs, the liquidator obtained personal bank statements from the Insolvency Service and Aviva Insurance Limited under an order made pursuant to section 236 of the Insolvency Act 1986. The respondents objected to the assignee’s use of those statements in the assigned proceedings, contending that they had been obtained compulsorily and that no consent had been given.

The application concerned whether the liquidator could disclose the documents to the assignee and whether the assignee could use them at trial without, or only with, the court’s permission.

1. Confidentiality. Documents obtained through compulsory insolvency powers attract an implied duty of confidentiality. It is a qualified duty. It cannot prevent disclosure which statutory provisions require or authorise, or prevent the office-holder from performing statutory duties.
2. Purpose of use. Material obtained under section 236 of the Insolvency Act 1986 should ordinarily be used only for purposes connected with the liquidation. Those purposes include investigating the company’s affairs, collecting and realising assets, bringing proceedings to recover assets, and obtaining the best return for creditors.
3. Assignment. Section 246ZD provides an office-holder with an option to realise a cause of action by assignment. The assignee does not step into the assignor’s shoes for all purposes. Confidential information remains protected, but controlled disclosure may be authorised where it is necessary to make the assignment commercially effective and advances the liquidation.
4. Application. The bank statements were material to proving the alleged diversion of funds. Disclosure to Asertis was permitted because it supported the free flow of information required to assess and pursue the assigned claim and could increase the return to creditors. The statements had to be redacted to disclose only the fact of deposits, rather than personal information.
5. Permission. Permission will ordinarily be the proper course where confidential information is to be used in litigation, although the need for permission is fact-sensitive. The liquidator was right to seek permission, and use in the assigned proceedings was authorised. The court did not decide issues concerning formal examination transcripts or whether the result would differ under the Norwich Pharmacal procedure.

First-instance decision. No appeal is stated in the judgment.