In England, being a liquidator or an administrator, you are an ‘officer of the court’. This generally means that a court has inherent jurisdiction to control the conduct of its ‘own’ officer if euther the procedure is being conducted by the court or the governing legislation so provides. A liquidator in a voluntary winding up, however, is not such an officer of the court.
What’s determinative to being an officer of the court? Whether the appointment is made by a court is not decisive as in a compulsary liquidation an appointment may have been made by the creditors or the Secretary of State. Anderson, in his recent book, which I reviewed last week (blog/corporate-insolvency-law-as-memoires) at 12.10, suggests that the office-holder is an officer of the court if either the procedure is being conducted by the court or the legislation so provides (as with ‘administration’). Being an officer of the court generally means as far as the jurisdiction of the court is concerned that (i) the rule of Ex parte James ((1874) LR 9 Ch App 609 (CA)) applies, and that (ii) interference with the performance of the officer-holder’s functions will be a contempt of court.
What is the position of an applicant having been appointed bankruptcy trustee by the High Court in St. Vincent and the Grenadines when he applies for and obtained an order from the English court recognising the proceedings in respect of the debtor as foreign main proceedings under Article 17 of the Cross-Border Insolvency Regulations 2016 (the English version of the UNCITRAL Model Law). Is he an officer of the court?
In a recent case, the question is answered by Robin Dicker Q.C. (sitting as a Deputy High Court Judge), see The Bankruptcy Trustee of Harlequin Property Svg Ltd v ELS Law Ltd & Ors [2017] EWHC 3004 (Ch) (28 November 2017) [2017] WLR(D) 791, [2017] EWHC 3004 (Ch). He cites ‘… the most authoritative word on this subject’, being a case decided by a judgment of Lord Neuberger in Re Nortel GmbH [2013] UKSC 52, who considered (at 122):
‘As to the common law, there are a number of cases starting with Ex p James; In re Condon (1874) LR 9 Ch App 609, in which a principle has been developed and applied to the effect that “where it would be unfair” for a trustee in bankruptcy “to take full advantage of his legal rights as such, the court will order him not to do so”, to quote Walton J in In re Clark (a bankrupt), ex p The Trustee v Texaco Ltd [1975] 1 WLR 559, 563. The same point was made by Slade LJ in In re TH Knitwear (Wholesale) Ltd [1988] Ch 275, 287, quoting Salter J in In re Wigzell, Ex p Hart [1921] 2 KB 835, 845: “where a bankrupt’s estate is being administered … under the supervision of a court, that court has a discretionary jurisdiction to disregard legal right” which “should be exercised wherever the enforcement of legal right would … be contrary to natural justice”. The principle obviously applies to administrators and liquidators: see In re Lune Metal Products Ltd [2007] Bus LR 589, para 34.’
There are a number of reasons why, in the judge’s view, the principle in ex parte James cannot assist the applicant in the present case:
‘The first reason is that the principle provides a means whereby “the court can control the conduct of its own officers” (see Re Lehman Brothers International (Europe) [2015] EWHC 2270 per David Richards J at [174]) and the Applicant is not an officer of this court’.
Liquidators in a voluntary liquidation have been held by the Court of Appeal not to be officers of the court and the same is the case for administrative receivers, the judge explains, ‘… even though both are entitled to seek the directions of the court in relation to matters arising during the course of the relevant proceedings’.
Given in the case at hand that the Applicant is not an officer of this court, having been appointed bankruptcy trustee by the High Court in St. Vincent and the Grenadines, the principle in ex parte James does not apply to him. Judge Dicker referes to other recent court cases, taking the same view.
Is that position affected by the fact that the Applicant applied for and obtained an order from the English court recognising the proceedings in respect of the Company as foreign main proceedings under article 17 of the CBIR. The juge answers negatively:
‘(1) Recognition under the CBIR triggers a stay on proceedings under article 21 and entitles the foreign representative to relief under article 21, including, as in this case, seeking the court’s directions, pursuant to article 21(1)(g). But, as illustrated by the position in relation to liquidators in a voluntary liquidation and administrative receivers, this entitlement does not make someone an officer of this court.
(2) When the legislature amended the regime governing administration in 2002, it expressly provided for administrators to be officers of the court, whether appointed by the court or not. Although enacted four years later, there is no similar provision in the CBIR.
(3) Status as an officer of the court entails amenability to the court’s supervisory jurisdiction, including its punitive and disciplinary powers. There is no indication that the CBIR was intended to permit this court to exercise such powers against a foreign professional, merely because he had obtained an order for recognition.’
The principle in Ex parte James therefore is not applied in this case.