BAILII is celebrating 24 years of free online access to the law! Would you consider making a contribution?
No donation is too small. If every visitor before 31 December gives just £1, it will have a significant impact on BAILII's ability to continue providing free access to the law.
Thank you very much for your support!
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback] | ||
England and Wales High Court (Chancery Division) Decisions |
||
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Green v BDO Stoy Hayward Llp [2005] EWHC 2413 (Ch) (02 November 2005) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2005/2413.html Cite as: [2005] EWHC 2413 (Ch) |
[New search] [Printable RTF version] [Help]
CHANCERY DIVISION
IN THE MATTER OF XL COMMUNICATIONS GROUP PLC (IN LIQUIDATION)
AND
IN THE MATTER OF THE INSOLVENCY ACT 1986
Strand, London, WC2A 2LL |
||
B e f o r e :
____________________
Elliot Harry Green |
Appellant (Applicant) |
|
- and - |
||
BDO Stoy Hayward LLP |
Respondent |
____________________
Miss. R Agnello (instructed by Reynolds Porter Chamberlain) for the Respondent
Hearing date: 25 October 2005
____________________
Crown Copyright ©
The Hon. Mr. Justice Kitchin :
Introduction
Background
" You have asked for specific issues which our client needs to address. We can confirm these as follows:-
(1) Details of all instructions issued to you by the Company, divided between:-
- auditing
- accounts preparation
- management accounts
- taxation work
- special work
- flotation work.
(2) Copies of letters of engagement.
(3) Details of all payments made to you for work carried out.
(4) A schedule of work undertaken by you.
(5) Details of all directors who issued instructions to you.
(6) Copies of all documents on your files that constitute copy Company records.
(7) Copies of all letters or attendance notes regarding advice on solvency. If there are no such letters or attendance notes, confirmation that no such advice has been provided.
(8) Details of the Company's assets and liabilities (fixed, current, cash, liabilities, contingent liabilities and any leases relating to the Company).
(9) Copies of all papers and documentation in which you acted as 'agent' of the Company under the ICAEW Rules.
(10) Company monies ledger print outs.
(11) AIM listing documents.
(12) Copy correspondence from directors and advice given in response to the first suspension of the shares on 4 July 1997.
(13) Correspondence from the directors and advice given in response to the second suspension of shares on 30 January 1998.
(14) Details of the Company's account with NatWest, together with any guarantee or cross guarantee together with copies of any bank statements on the files.
(15) Copies of correspondence with Shipley's.
(16) Copies of correspondence with North & Co.
(17) An explanation of the need for police involvement in the Company.
(18) Full details/schedule of the inter company position with Telecomms UK Ltd.
(19) Full details/schedule of the inter company position with Personal Number Company Plc.
(20) Breakdown of director's loan accounts.
Please note that further requests may follow receipt of your response and the documentation provided."
"Your letter of 27 January 2005 requests a large number of documents (both working papers and company records), schedules of information, and information without providing an explanation as to your client's purpose. We remain at a loss as to why your client requires us to go to the considerable time, cost and effort in complying with your request given that:
i) XL Communications Plc was wound up on 1 April 1998;
ii) we resigned as auditors for Life Numbers Plc on 24 July 1997;
iii) our last material involvement was the audit report for Life Numbers Plc and the AIM listing for the same in July 1996;
iv) after almost 7 years of liquidation investigations your client will be clearly in possession of the company records.
Although your client may only have been appointed as liquidator on 6th August 2004, his former colleague was the previous liquidator. You have provided no details as to what the previous liquidator had already carried out by way of investigations and what particular part of his investigations lead your client, the current liquidator to seek documents from us. If it is the case that the previous liquidator failed to carry out his duties, then this is a matter which should be brought to the attention of the Court. We find it extraordinary that the previous liquidator did not make such a request to us bearing in mind that the relevant limitation periods for bringing proceedings as against third parties all expired whilst he was the office holder.
What is apparent from your letter is that many of the requested documents relate to periods after we ceased to act. Referring to your list of specified documents and requests for information:
(13) We had resigned on 24 July 1997
(14)(15) Without retrieving and carrying out a review of our files we understand that the only correspondence with Shipley's was in connection with our resignation
(16) We are not familiar with the company mentioned
(17) We had no knowledge of any police involvement with Life Numbers Plc, or with XL Communications Plc (a company that we did not act for)
(18) We are not familiar with Telecoms UK Limited
The nature of your client's enquiries would suggest that XL's auditors and advisors are better able to assist.
If your client is able to specify a legitimate purpose for which access is required and indicating the Company records that are missing this respect, we will reconsider your request. At present, the failure to particularise the purpose and properly specify the documents which we could have in relation to the particular events that your client wants to investigate (despite repeated requests), leads to our view that the application is both unreasonable and oppressive and thus unlikely to succeed."
The application
"In order for me to investigate the affairs of the Company it is necessary for me to review the respondent's file of papers."
Decision of the District Judge
"4…This is an extraordinary power which needs to be exercised carefully and in which the court has an unfettered discretion. The liquidator has to establish a reasonable requirement for the information he seeks. The onus falls upon him but his views are normally entitled to a great deal of weight. It is then for the court to carry out the balancing exercise, weighing the potential importance of the information sought to the liquidator against the potential oppressiveness to the respondent.
5. So what are the requirements? As is clear from case law the documents required are those that are necessary to reconstitute the state of the company's knowledge to fill the gaps. It also extends to all documents which the liquidator may reasonably require in order to carry out his functions. His function is to realise assets and thereafter distribute the funds. He may need to investigate certain transactions, matters which may involve transactions by directors, preferential treatment of certain creditors, or a transaction at undervalue."
The District Judge then related the substance of the evidence relied upon by the Liquidator and summarised the contents of the letter from BDO dated 8 February 2005. He continued:
"7. …However, they did offer to revisit the matter upon the purpose being identified in respect of the documents in possession of the respondents. No such purpose has been identified.
8. I have considered the case law referred to me and it appears to me that in all those cases the administrators and/or liquidators have made clear what they are investigating. There is no need to set out in detail the nature of the investigations but a general but identified nature of the investigation should at least be made out; more so given the extraordinary nature of the relief sought.
9. Further in a case such as this where considerable time has elapsed since the respondent's involvement, it falls upon the liquidator to set out what enquiries/ investigations have been made and the result of those which has therefore resulted in the application in order for him to complete the enquiries and fill in the gaps in the information about the company's affairs, dealings and property. There is no need for the liquidator to make out the requirements in detail.
10. In this case, I am not satisfied that the applicant has discharged the onus of showing a reasonable requirement for the information and documents and, accordingly, I dismiss the application."
Relevant legal principles
Grounds of appeal