Jersey: Insolvency And Restructuring: Mutual Crossborder Insolvency Assistance: Section 426, Insolvency Act 1986

HSBC Bank Plc -v- Tambrook Jersey Limited [2013] EWCA Civ 576 22 May 2013 On appeal from [2013] EWHC 866 (Ch) 12 April 2013

On 22 May 2013 the Court of Appeal of England and Wales delivered the reasoned judgment for allowing the appeal from the decision of the High Court of 12 April 2013 which we referred to in an e-alert dated 2 May 2013. The judgment provides a welcome confirmation of the importance of co-operation, reducing complexity and cost and acting in the best interest of creditors in insolvency matters.

The Court of Appeal stated that the request for assistance by the Royal Court of Jersey to the English High Court made under section 426 of the Insolvency Act 1986 should be accepted and consequently ordered that Tambrook Jersey Limited, a Jersey incorporated company with property in England, should in all the circumstances be placed into English administration.

Section 426(4) of the Insolvency Act 1986 states "The courts having jurisdiction in relation to insolvency law in any part of the United Kingdom shall assist the courts having the corresponding jurisdiction in any . . . relevant country or territory". "country or territory" includes Jersey.

Mr Justice Mann in the High Court had held that he had no jurisdiction to make the order as the English Court was not "assisting" the Jersey Court "in its functions as an insolvency court". It was not "being asked to assist the Jersey Court in any endeavour." It was instead being asked to "provide insolvency proceedings in lieu of any Jersey insolvency proceedings".

He said "This court cannot "assist" another court which is not actually doing anything, or apparently intending to do anything, in its insolvency jurisdiction".

In the Court of Appeal, after citing authorities, Lord Justice Longmore said this interpretation and approach was unduly and unnecessarily restrictive for the following reasons:

  1. Section 426 was not applicable "to courts exercising jurisdiction in relation to insolvency law"; it is, by its wording, applicable to courts having jurisdiction.
  2. Section 426(4) and (5) are to be given a broad interpretation. There was no reason to apply a narrow and restrictive approach.
  3. This interpretation did not infringe the principle of "modified universalism" and to decide otherwise would tend to the opposite conclusion and lead to the need for separate formal insolvency processes and would run up needless costs.
  4. The Jersey Court was engaged in an endeavour which was to further the interests of the company and its creditors and facilitate the most efficient collection and administration of the company's assets. It was clear that the Royal Court of Jersey had carefully considered its jurisdiction and the request it made.

In conclusion, the making of the request in this context was considered to be part of the exercise of Jersey insolvency law.

As the High Court would, but for the point on "assist", have granted the administration, the Court of Appeal therefore made such orders. It followed that the orders in the other previous cases were ones the English courts had jurisdiction to make.

Comment

This clearly accords with a number of previous applications of a similar kind from both Jersey and the Isle of Man. It is consistent with the origin of this section and with the principle of modified universalism described in Re HIH Casualty and General Insurance Limited [2008] UKHL 21, [2008] 1 WLR 852 at paragraphs 6 and 30.

It is consistent with Re O.T. Computers Limited 2002 JLR N[10], the first of this line of cases (in which Bedell Cristin acted) where the interests of creditors was important and, following Re REO (Powerstation) Limited 2012 (1) JLR N[13], where the interests of the debtor or the public interest are also important.

The decision is welcome, not only for applications involving Jersey and England, but all courts of the United Kingdom and any . . . "relevant country or territory" including the Channel Islands and the Isle of Man and further, any of those courts in other designated or prescribed countries under their own legislation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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