Re Skeggs Beef Ltd [2019] EWHC 2607 (Ch)

Joint administrators sought a declaration that their appointment was valid despite the notice being filed via the Electronic Working Pilot Scheme rather than the prescribed Insolvency Rules procedure. The court held the defect was purely formal, causing no substantial injustice, and declared the appointment valid from 5:03pm on 10 September 2019.

Facts

Ms Eason and Mr Sanders of MacIntyre Hudson LLP were appointed as joint administrators of Skeggs Beef Limited by holders of a qualifying floating charge. The notice of appointment was filed at 5:03pm on 10 September 2019, after the court had closed at 4:30pm. However, instead of following the out-of-hours filing procedure prescribed under rule 3.20 of the Insolvency (England and Wales) Rules 2016 (requiring fax or email to designated addresses), the notice was filed using the Electronic Working Pilot Scheme under Practice Direction 51O of the Civil Procedure Rules.

Issues

Primary Legal Issue

Whether the appointment of the joint administrators was valid when the notice was filed using the wrong electronic filing procedure.

Secondary Issue

The relationship between the Insolvency (England and Wales) Rules 2016 and Practice Direction 51O regarding electronic filing of documents.

Judgment

Mr Justice Marcus Smith granted the declarations sought by the Applicants. The court held that the Insolvency Rules constitute distinct secondary legislation that cannot be overridden by a Practice Direction in the CPR.

Where the Insolvency Rules – as here – specify in great detail a regime for the notification of the appointment of administrators, that regime cannot be trumped or overridden by a Practice Direction in the CPR.

The court distinguished between fundamental defects (rendering appointments nullities) and non-fundamental defects that can be cured. The court applied rule 12.64 of the Insolvency (England and Wales) Rules 2016:

No insolvency proceedings will be invalidated by any formal defect or any irregularity unless the court before which objection is made considers that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of the court.

The judge concluded that this was a case of purely formal defect causing no substantial injustice to anyone.

Implications

This judgment clarifies the hierarchy between the Insolvency Rules and CPR Practice Directions. It establishes that the only proper way to give notice of administrator appointments is through the Insolvency (England and Wales) Rules 2016. The Electronic Working Pilot Scheme cannot supplement or override specific Insolvency Rules provisions. However, procedural errors in the manner of filing (as opposed to fundamental failures to use prescribed forms) can be cured under rule 12.64 where no substantial injustice results.

Verdict: The court declared that the Applicants’ appointment as joint administrators was valid and took effect at 5:03pm on 10 September 2019. The court further declared that none of the Applicants’ acts as administrators could be invalidated by reason of the defective notice of appointment.

Source: Re Skeggs Beef Ltd [2019] EWHC 2607 (Ch)