Insolvency Experts Highlight The Implications Of Recent High Court Decisions

Recent decisions of the High Court should serve as a warning to companies, directors, Qualifying Floating Charge Holders (QFCH) and Insolvency Practitioners seeking to e-file a Notice of Appointment (NOA) outside of court business hours. Such appointments have been deemed ineffective and will probably require a further application to the court to confirm the validity of the appointment. This will also apply to existing Administrations.

The decisions of (1) Lee Causer, (2) Neville Side v All Star Leisure (Group) Ltd [2019] EWHC 3231 (Ch) and Re Skeggs Beef Limited [2019] EWHC 2607 (Ch) have confirmed that a QFCH must follow the protocol set out in rule 3.20 of the Insolvency (England and Wales) Rules 2016 (IR 2016) when filing an NOA outside of court hours. Crucially however, if this procedure is not followed, the court is willing to cure such a defect, meaning the appointment will be deemed effective at the time of filing.

In relation to directors appointing Administrators, the cases of SJ Henderson & Company Limited and Re Triumph Furniture Limited [2019] EWHC 2742 have confirmed that directors are not permitted to file an NOA outside of court hours, and if they do so, the appointment will be deemed effective at 10:00am on the following business day. 

The rules relating to e-filing NOAs outside of court hours

Prior to the e-filing system being introduced, an NOA or a Notice of Intention (NOI) could only be filed by a company, or a director within court hours. Conversely, a QFCH was able to file an NOA outside of court hours, if they followed the designated procedure set out in rule 3.20 IR 2016.

The above protocol changed somewhat when the Electronic Working Pilot Scheme, governed by CPR Practice Direction 51O (PD 51O) was introduced. PD 51O effectively allows parties to issue proceedings and file documents 24 hours a day. 

However, the carve out provision in CPR PD 51O provides the exception that, where the filing is an NOA by a QFCH, the filing must be in accordance with rule 3.20 IR 2016.

Rule 3.20 IR 2016 sets out the procedure to follow when an appointment is taking place outside of court business hours. It states that a QFCH may file an NOA out of hours by either faxing the NOA to the designated telephone number, or emailing the NOA to the designated email address.

Such carve out provision in PD 51O meant that the QFCHs in the All Star Leisure decision and Re Skeggs Beef Limited cases were not able to use the 24 hour e-filing system to file an NOA outside of the court’s business hours. Instead, they were required to follow the procedure set out in rule 3.20 IR 2016. As neither QFCH filed the NOA to the designated telephone number, or email address, the NOA was deemed ‘defective’. However, in both instances, the court was willing to ‘cure the defect’ by making a declaration that the appointments were valid. Accordingly, both appointments were deemed effective at the time at which they were filed (i.e. outside of court business hours).

Contrastingly, there are no set rules relating to the procedure that a company, or a director must follow in relation to e-filing an NOA outside of court hours. Hence, there has been some confusion as to whether PD 51O applies, allowing for the company or director to file an NOA 24 hours a day.

In the cases of SJ Henderson & Company Limited and Re Triumph Furniture Limited, ICC Judge Burton found that the rules do not permit directors, or a company to appoint an Administrator out of court hours. As a result, the NOAs filed were deemed to have taken effect at 10:00am the next working day (i.e. when the court re-opened).

While there has been some confusion as to the rules on filing NOAs, it seems reasonable to conclude that, the filing of an NOA by either the company, directors, or a QFCH ought to be done within court business hours, to avoid uncertainty and a potential subsequent court application. The only exception to this rule would be if such filing was done by a QFCH who followed the set procedure set out in rule 3.20 IR 2016.

Conclusion

In conclusion, directors, companies, QFCHs, and Insolvency Practitioners looking to file NOAs must ensure that the NOA is either filed during court hours, or that rule 3.20 IR 2016 is followed if a QFCH is filing the NOA. 

For NOAs which have already been filed, if the NOA was filed outside court business hours it may be necessary to apply to court to provide an order to effectively cure the ‘defect’ and confirm the appointment is valid. We would be happy to advise on this point.

Finally, this judgment highlights the importance of checking the business hours of the court at which you are filing an NOA at as hours can differ dependent on location. By way of an example, while the court in Birmingham’s opening hours are 10:00am - 4:00pm, London’s business hours are 10:00am – 4.30pm.