|
Millhouse Capital UK Ltd and another v Sibir Energy plc and others
Citation [2008] All ER (D) 311 (Oct)
Alternative Citations [2008] EWHC 2614 (Ch)
Hearing Date 29 October 2008
Court Chancery Division
Judge Christopher Clarke J
Representation Alan Boyle QC and Richard Walford (instructed by Skadden, Arps, Slate, Meagher & Flom (UK)) for the applicants.Robin Dicker QC, Michael Swainston QC, Mark Arnold and Robert D'Cruz (instructed by Clyde & Co LLP) for the respondents.
Abstract
Company – Winding up . Chancery Division: The court allowed the applicants' application to dismiss the company's winding up petition in circumstances where there had been substantial non-disclosure by the company to the court, with the result that the issue of proceedings by the company against the applicants had been an abuse of process.
CatchwordsCompany – Winding up – Petition – Unregistered company – Russian company successfully applying for appointment of provisional liquidator in England – Liquidator applying for winding up of company – Company subsequently commencing proceedings against applicants – Applicants seeking dismissal of petition to wind company up – Applicants claiming, inter alia, failure by company to disclose important and relevant matters to court – Whether petition should be dismissed.
Summary
The company was an unregistered company being wound up in Russia. In May 2007, the company was declared insolvent, and K was appointed as its liquidator. The company was carrying on business only for the purpose of winding up its affairs and was unable to pay its debts. Accordingly, pursuant to s 221 of the Insolvency Act 1986, the English courts had jurisdiction to wind it up. K had powers equivalent to those of an English liquidator. In those circumstances, he was entitled to be recognised as liquidator, empowered by the insolvency law of Russia to act on the company's behalf and enabled to act on its behalf in England without having to start English insolvency proceedings. On 12 November, a petition was filed in the High Court in England by the company's parent company and another company for the winding up of the company, and the appointment of a provisional liquidator. The avowed purpose of the petition was to secure the appointment of an English liquidator who would carry forward a Commercial Court action which the company had commenced against the applicants. On 14 November, C was appointed as provisional liquidator of the company. On that same date, the company commenced proceedings against the applicants. The applicants subsequently sought an order that: (i) the appointment of C should be set aside; (ii) and a declaration that the court should decline to exercise its insolvency jurisdiction over the company; and (iii) an order that the petition to wind the company up should be dismissed.
The company was an unregistered company being wound up in Russia. In May 2007, the company was declared insolvent, and K was appointed as its liquidator. The company was carrying on business only for the purpose of winding up its affairs and was unable to pay its debts. Accordingly, pursuant to s 221 of the Insolvency Act 1986, the English courts had jurisdiction to wind it up. K had powers equivalent to those of an English liquidator. In those circumstances, he was entitled to be recognised as liquidator, empowered by the insolvency law of Russia to act on the company's behalf and enabled to act on its behalf in England without having to start English insolvency proceedings. On 12 November, a petition was filed in the High Court in England by the company's parent company and another company for the winding up of the company, and the appointment of a provisional liquidator. The avowed purpose of the petition was to secure the appointment of an English liquidator who would carry forward a Commercial Court action which the company had commenced against the applicants. On 14 November, C was appointed as provisional liquidator of the company. On that same date, the company commenced proceedings against the applicants. The applicants subsequently sought an order that: (i) the appointment of C should be set aside; (ii) and a declaration that the court should decline to exercise its insolvency jurisdiction over the company; and (iii) an order that the petition to wind the company up should be dismissed.
The applicants submitted, inter alia, that the appointment of the provisional liquidator on 14 November 2007 had been procured by materially misleading statements and by a failure to disclose matters of relevance and importance to the court.
The application would be allowed.
The question of whether, in the absence of full and fair disclosure, an order should be set aside and, if so, whether it should be renewed either in the same or in an altered form, was pre-eminently a matter for the court's discretion, to which the facts (if they be such) that the non-disclosure was innocent and that an injunction or other order could properly have been granted if the relevant facts had been disclosed, were relevant. In exercising that discretion the court looked both backwards and forwards. The court would look back at what had happened and examine whether, and if so, to what extent, it was not fully informed, and why, in order to decide what sanction to impose in consequence. The obligation of full disclosure, an obligation owed to the court itself, existed in order to secure the integrity of the court's process and to protect the interests of those potentially affected by whatever order the court was invited to make. The court's ability to set its order aside, and to refuse to renew it, was the sanction by which that obligation was enforced and others were deterred from breaking it. Such was the importance of the duty that, in the event of any substantial breach, the court strongly inclined towards setting its order aside and not renewing it, so as to deprive the defaulting party of any advantage that the order might have given him.
In the instant case, there had been substantial non-disclosure on more than one account. The matters not disclosed had not been peripheral to the case which the company sought to assert or to the alleged urgency of the application. Whilst there had been no intention to mislead the court, for whatever reason, inadequate disclosure had been made to the court, and the extent of the non-disclosure was such that, had the claims not been struck out, the order appointing a provisional liquidator would have been set aside, and the claim dismissed. It would then have been be open to the company to commence new proceedings. In those circumstances, the issue of proceedings was an abuse of the process of the court and the court was entitled to take whatever steps were necessary to deprive the defaulting party of the fruits of his default (see [107], [111]).
The winding up petition would be dismissed.
Arena Corpn Ltd (in provisional liquidation) v Schroeder [2003] All ER (D) 199 (May) considered.
Neneh Munu Barrister.
 Add as favourites (216) |  Quote this on your site | Views: 2312
Only registered users can write comments.
Please login or register. Powered by AkoComment Tweaked Special Edition v.1.4.6
AkoComment © Copyright 2004 by Arthur Konze - www.mamboportal.com
All right reserved |
Comment first