Citation

[2009] All ER (D) 31 (Mar) 

Hearing Date

27 February 2009 

Court

Chancery Division 

Judge

Lewison J (Judgement delivered extempore) 

Abstract

Company – Liquidator. Chancery Division: Pursuant to an application under s 112 of the Insolvency Act 1986 the court granted the liquidators application in relation to issues arising out of an application to transfer data to the United States pursuant to an exception to Pt 1 of Sch 1 to the Data Protection Act 1998.  

Catchwords

Company – Liquidator – Statutory Power – Joint liquidator of company applying for transfer of personal data to United States – Whether transfer necessary for reasons of substantial public interest – Whether court should grant relief sought – Insolvency Act 1986, s 112 – Data Protection Act 1998, Sch 1, Sch 4, ss 4(1) and 5. 

Summary

Section 112 of the Insolvency Act 1986 provides, so far as material: '(1) The liquidator or any contributory or creditor may apply to the court to determine any question arising in the winding up of a company, or to exercise, as respects the enforcing of calls or any other matter, all or any of the powers which the court might exercise if the company were being wound up by the court. (2) The court, if satisfied that the determination of the question or the required exercise of power will be just and beneficial, may accede wholly or partially to the application on such terms and conditions as it thinks fit, or may make such other order on the application as it thinks just.'

The Data Protection Act 1998 provides, so far as material: 'Sch 1 Personal data shall not be transferred to a country or territory outside the European Economic Area unless that country or territory ensures an adequate level of protection for the rights and freedoms of data subjects in relation to the processing of personal data ... Sch 4 ... s 4(1) The transfer is necessary for reasons of substantial public interest ... s 5 The transfer — (a) is necessary for the purpose of, or in connection with, any legal proceedings (including prospective legal proceedings), (b) is necessary for the purpose of obtaining legal advice, or (c) is otherwise necessary for the purposes of establishing, exercising or defending legal rights.'

The instant proceedings involved an American company, BMIS LLC and an English company, MS Int (the company). The joint liquidators of the company applied under s 112 of the Insolvency Act 1986 (the 1986 Act) for various orders regarding data that at the time was protected by the Data Protection Act 1998 (the 1998 Act). Section 4 of the 1998 Act provided in the eighth principle of Pt 1 of sch 1 (the eighth principle), that personal data shall not be transferred to a country or territory outside the European Economic Area unless that country or territory ensured an adequate level of protection for the rights and freedoms of data subjects in relation to the processing of personal data. The liquidators wished to transfer data to the United States which did not ensure an adequate level of data protection. Exceptions to the eighth principle were out in Sch 4, para 4(1) of the 1998 Act. Paragraph 4(1) provided that it was possible to disapply the eighth principle where the transfer of data was necessary for reasons of substantial public interest.

The liquidators submitted that transfer of the data was for reasons of substantial public interest as it was necessary to unravel the alleged fraud and discover what had happened to various assets that had been invested. The issues involved a discussion of ss 5(a) and (c) of the 1998 Act.

The application would be granted.

On the evidence, the transfer of the data scheduled to the draft order was necessary for reasons of substantial public interest. Paragraph 5 of sch 4 to the 1998 Act was another relevant exception to the eighth principle. On the basis that the unravelling of the fraud would undoubtedly involve legal proceedings, and the establishment of legal rights would be necessary to wind up the affairs of both parties. On the evidence, ss 5(a) and 5(c) of the 1998 Act were both satisfied.

An order would be made in terms of the draft order.

Benjamin Weaver Barrister.

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