Jeremy Robert Webb & Anor v Eversholt Rail Limited & Anor

Liquidators seeking information or documents under sections 235 or 236 of the Insolvency Act 1986 must establish a reasonable requirement for the material sought. A purpose of reconstituting the company’s knowledge is relevant, but it does not create an automatic entitlement to all documents held by another group company. The court must balance the liquidator’s requirements against unnecessary, unreasonable or oppressive burdens on the respondent. A broad request may succeed on the facts, but the liquidator must justify its breadth. An appellate court will not reconsider an evaluative first-instance decision absent an identifiable flaw in the reasoning.

The joint liquidators of Eversholt Rail (365) Ltd appealed against ICCJ Burton’s dismissal of applications under sections 235 and 236 of the Insolvency Act 1986. They sought extensive documents and information from Eversholt Rail Ltd, which had provided administrative services to 365 and held substantially all relevant records, and from Norton Rose Fulbright LLP, which had provided legal services to group companies.

The liquidators argued that they were entitled to reconstruct 365’s corporate knowledge and, in the alternative, that the circumstances made an extensive disclosure reasonably required. The central issue was whether that purpose, together with the Services Agreement and the alleged deficiencies in disclosure, justified the wide orders sought.

1. Appeal dismissed. All grounds of appeal failed. The decision below was an evaluative decision that the liquidators had not established a reasonable requirement for the very broad categories of documents sought.
2. Section 235 expressly requires information which the office-holder may reasonably require. The same qualification applies to section 236. The applicant must establish a proper case after balancing the liquidator’s reasonable requirements against the need to avoid an unnecessary, unreasonable or oppressive burden on the person required to produce the material. The liquidator’s view normally receives considerable weight, but the burden of establishing the case remains with the liquidator.
3. Reconstituting the company’s state of knowledge is an underlying purpose of the statutory powers and may justify extensive disclosure on the facts. It is not, however, a standalone entitlement to all corporate documents, nor is section 236 confined to documents needed for that purpose. The liquidators therefore had to justify the requested breadth, described as “everything forever”. They had not done so.
4. The Services Agreement formed an important part of the factual background, but the application was brought under the statutory provisions, was not framed as specific performance, and extended beyond the documents covered by clause 7.3. The agreement did not justify a less exacting statutory test.
5. The privilege issue concerning advice obtained for 365’s benefit did not need to be decided because no reasonable requirement had been established for the broad category sought. A more focused privilege dispute would arise only after a reasonable requirement for particular material had been shown.
6. It was open to the first-instance judge to consider narrower categories, but doing so was a case-management decision. The narrower relief had not been clearly advanced as an alternative, and there was no basis for appellate intervention.

• High Court, Chancery Appeals: Sir Anthony Mann dismissed the appeal against the order of ICCJ Burton dated 27 September 2024, based on her judgment delivered on 29 August 2024.