England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
MANCHESTER DISTRICT REGISTRY
His Honour Judge Bird
EWHC 772 (CH)

		Royal Courts of Justice Strand, London, WC2A 2LL
		11 April 2017

LORD JUSTICE DAVID RICHARDS:

Introduction

1. Schedule B1 to the Insolvency Act 1986 makes provision for the administration of a company that is insolvent or likely to become so. The primary purpose of an administration, as stated in the legislation, is to rescue the company as a going concern. An administrator is appointed to manage the company's affairs, business and property. He is an officer of the court and he in effect supersedes the board of directors as regards the management of the company.
2. One effect of the appointment of an administrator, essential to the fulfilment of the purposes of an administration, is a moratorium on alternative insolvency proceedings and other legal process for which paragraphs 40 to 43 of schedule B1 make provision. The moratorium extends to the enforcement of security over the company's property, the repossession of goods in the company's possession under hire purchase agreements, the exercise of rights of forfeiture of leasehold premises, and the institution or continuation against the company or its property of any legal process, including legal proceedings, execution and distress. Paragraph 44 makes provision for an interim moratorium to which I will refer below.
3. When the administration procedure was first introduced in 1986, an administrator could be appointed only by an order of the court made on an application by the company, its directors or a creditor. The extensive amendments to the procedure introduced by the Enterprise Act 2002 included provisions for the appointment of an administrator out of court. An appointment may still be made by the court, but an appointment out of court may be made by the holder of a "qualifying floating charge" (as defined in paragraph 14 (2)), the company or the directors.
4. The holder of a qualifying floating charge has the right to appoint an administrator in priority to the exercise of that right by the company or its directors. Accordingly, paragraph 26 provides that where the company or its directors propose to make an appointment of an administrator, they must give at least five business days' written notice to the holder of any qualifying floating charge. The purpose of such notice self-evidently is to give the holder of the floating charge an opportunity to exercise its right of appointment. Where such a notice of intention to appoint is given under paragraph 26, the company or its directors are required by paragraph 27 to file with the court as soon as is reasonably practicable a copy of the notice and any document accompanying it. Paragraph 28 provides that the company or its directors may not appoint an administrator without first complying with those requirements and either the period of notice of at least five business days has expired or the persons to whom the notice has been given consent in writing to the appointment. Paragraph 28(2) further provides that an appointment of an administrator may not be made by the company or its directors more than ten business days after filing a copy of the notice with the court.
5. Under paragraph 44, an interim moratorium on alternative insolvency proceedings and other legal process arises as soon as a copy of the notice of intention to appoint an administrator is filed with the court under paragraph 27 and lasts until either the appointment of the administrator takes effect or the end of ten business days after the notice is filed with the court.
6. This is the statutory background against which the issue on this appeal arises. Is it open to a company or its directors to give a notice of intention to appoint an administrator under paragraph 26, and file a copy of it with the court under paragraph 27, thereby triggering the interim moratorium for a period of up to ten business days, without a fixed intention to appoint an administrator? The judge below, HH Judge Bird, put the issue as follows in paragraph 1 of his judgment:

"The issue before me is this: in order to file a notice of intention to appoint an administrator and so cause the statutory interim moratorium to come into effect, does a director need to have at the point of filing a settled intention to appoint an administrator, or is it sufficient that the director sees the appointment of an administrator as a second best choice in the event that other schemes he is contemplating do not work out?"

7. The judge held that it was not necessary for the company or its directors to have, at the point of filing a copy of the notice, a settled intention to appoint an administrator. He granted permission to appeal.
8. The judge's decision was made on an application issued by the appellant against Davis Haulage Limited (the company) on 11 March 2016. The appellant sought an order that a copy of a notice of intention to appoint an administrator dated 4 March 2016 filed by the company "be vacated and removed from the court file". The basis of the application was that, when giving the notice and filing a copy with the court, the company did not have a settled intention to appoint an administrator but, at best, proposed to do so only if its proposal for a company voluntary arrangement was not approved. The appellant also sought retrospective permission under paragraph 43(6) of schedule B1 for the issue of a possession claim and for permission to continue the possession proceedings.

The facts

9. The material facts may be summarised as follows.
10. The appellant is the registered proprietor of warehouse premises in Crewe of which the company is the tenant under a lease made on 28 June 2012 with the appellant's predecessor in title.
11. Due to the company's rent arrears, a payment plan was agreed in March 2015 for settlement of the arrears in instalments but the company failed to pay rent falling due on subsequent dates and by January 2016 the arrears amounted to over £261,000 plus interest. By a letter dated 18 January 2016, the appellant notified the company of its intention to take steps to recover possession of the premises if payment in full was not received within seven days. On 28 January 2016, in the absence of payment, the appellant issued possession proceedings in the County Court at Crewe.
12. Meanwhile, and unknown to the appellant, on 22 January 2016 the sole director of the company, Mr Davis, filed a copy of a notice of intention to appoint an administrator (the first notice) in the Manchester District Registry of the High Court. The notice had been given to Close Brothers Limited as the holder of a qualifying floating charge.
13. The notice was in the form prescribed pursuant to rule 2.20 of the Insolvency Rules 1986. It stated that the directors (in fact, Mr Davis was the only director) of the company intended to appoint Steven Muncaster and Sarah Helen Bell of Duff & Phelps Limited as administrators of the company and that the notice was being given to Close Brothers as a person entitled to appoint an administrator under paragraph 14 of schedule B1. The information contained in the notice was verified by a statutory declaration made by Mr Davis.
14. As required by the terms of the prescribed form, there was attached to the notice "a record of the decision of the directors to appoint an administrator". The record, signed by Mr Davis, stated that he had carefully considered and discussed the financial position of the company and noted his opinion that the company was insolvent and that it was "appropriate that the Director should seek the immediate appointment of administrators to the Company as soon as is reasonably practicable." It recorded that "[i]n the circumstances, and with a view to preserving the value of the Company's assets, the Director resolved that, among other things that the Director "shall notify on Form 2.8B Close Brothers Limited (Security Holder) of their [sic] intention to appoint joint administrators of the Company" and shall complete and sign such other documentation as may be required "in order to effect the director's appointment of the administrator [sic] of the Company".
15. Under cover of an email dated 2 February 2016, a copy of the first notice was sent to the appellant's agent by Matthew Peat of Duff & Phelps Limited. Mr Peat stated that the notice had been filed in view of the appellant's proposal to bring possession proceedings against the company and the threat of the presentation of a winding-up petition by HMRC for unpaid VAT, PAYE and national insurance contributions. Mr Peat stated that his firm were currently working with the company's management and its invoice discount provider:

"to find a feasible solution to secure the business going forward. It is the intention for D&P to undertake a marketing exercise this week with a possibility of completing a sale of the business and assets of the Company as a going concern having been given an authority to do so by the Company's director, Damion Davis."

16. The interim moratorium that arose as a result of filing the copy of the first notice on 22 January 2016 expired at the end of Friday 5 February 2016 by operation of paragraphs 44(4) and 28(2) of schedule B1.
17. On 5 February 2016, a copy of a further notice of intention to appoint an administrator (the second notice) was filed by Mr Davis at the Manchester District Registry. The filing of this notice had the effect of commencing a further interim moratorium for up to ten business days ending on 19 February 2016. Mr Peat sent a copy of it to the appellant's solicitors and stated in the covering email:

"For the avoidance of doubt, the Company is currently NOT in Administration and we are not acting in any formal capacity as things stand although we are working with the Mgt team and the Company's principal funder and only secured lender, Close Brothers with a view to securing the business future survival…

As discussed, one element of the proposal is to settle the arrears in full with your client and they are looking to discuss terms going forward as part of their commitment to the business."

18. A further notice of intention to appoint administrators (the third notice) was filed at the Manchester District Registry on 19 February 2016. A further moratorium therefore commenced with the filing of that notice. In a covering email, Mr Peat repeated that the company was not currently in administration and that his firm was working with the management team and Close Brothers with a view to securing "the business future survival".
19. Despite the giving and filing of these notices, with their accompanying statutory declarations and board resolutions, no administrators were appointed. It seems clear that the notices were given and copies filed with the court in order to secure the automatic moratorium while consideration was given to the best means of securing the future of the company or its business.
20. On 23 February 2016, Mr Peat informed the appellant's solicitors that the company was preparing a proposal for a company voluntary arrangement (CVA). On 29 February 2016, Mr Peat said that a draft CVA proposal would be finalised the following day with a view to a meeting of creditors on 18 March 2016. In answer to a question as to the position if the CVA was not acceptable to creditors, Mr Peat responded "Alternative insolvency options would be considered if the CVA Proposal that is put to creditors is not accepted by the creditors at the forthcoming meeting of creditors."
21. On 3 March 2016, the CVA proposal was filed at the Manchester District Registry and it was circulated to creditors under cover of a letter dated 4 March 2016, with a meeting of creditors convened to consider the proposal to be held on 23 March 2016. Mr Muncaster and Ms Bell were the appointed nominees in respect of the proposal and in their report to the court under section 2 of the Insolvency Act 1986 they stated:

"If the proposal is not approved, it is probable that the Company will have to go into Administration or Liquidation."

22. On 4 March 2016, Mr Davis gave a further notice of intention to appoint an administrator and filed a copy of it at the Manchester District Registry (the fourth notice), with the result that a further moratorium of up to ten business days commenced. The notice and accompanying documents were in the same terms as those previously filed, including the resolution that Mr Davis was to complete all necessary documentation in order to effect the appointment of the administrator of the company.
23. In a witness statement filed by Mr Davis in these proceedings, he states that following the issue of the CVA proposal in early March 2016 creditors with a value greater than the minimum voting requirement intimated that they did not intend to support the CVA and that there was clear uncertainty as to whether a CVA would be successful. He continued:

"As such, [the company] approached Leonard Curtis with a view to them providing advice on contingency planning in respect of [the company] should the CVA proposal not be approved. In conjunction with contingency planning Leonard Curtis and I remain in discussions with [the company's] creditors in relation to the CVA."

24. He further stated that the advice given by Leonard Curtis was that, in the absence of approval of the CVA, the company should consider a sale of its business, so as to secure the continuation of its trade, the avoidance of redundancies of its employees and the achievement of the best outcome for creditors as a whole. He went on to state that consideration was being given to a sale of the business and assets as a "pre-pack" sale. This would be necessary as the company had the benefit of haulage operating licences which an administrator would not be able to hold, so that the business would not be able to continue to trade in an administration.
25. He concluded his witness statement by saying:

"DHL is suffering significant creditor pressure from its landlord, the Applicant and haulage subcontractors. As such, to preserve the value of the business such that DHL can execute a successful pre-pack sale and achieve a better outcome for the creditors that would otherwise be the case if DHL was placed into liquidation I consider it appropriate and necessary for DHL to have the benefit of a moratorium. Given there is a real possibility that the CVA proposal will not be approved it is my intention to place DHL into administration should the CVA proposal not be approved."

26. The evidence shows that at the time of giving each of the first three notices of intention, the appointment of an administrator was at most one of a range of possible outcomes for the company. This may well also have been the position at the time of filing the fourth notice, but the level of opposition to the CVA proposal following its circularisation on 3 March 2016 appears to have led to a position that an administrator would be appointed, if the creditors did not support the CVA proposal.
27. The CVA proposal was approved with modifications at an adjourned meeting of creditors held on 6 April 2016. Accordingly, an administrator was not appointed. However, the CVA subsequently failed in December 2016 and the company went into administration on 23 December 2016.

The proceedings

28. As earlier mentioned, the appellant issued its application on 11 March 2016, seeking an order that the fourth notice be vacated and removed from the court file on the grounds that it constituted an abuse of process. The further relief of retrospective permission for the commencement of the possession proceedings and permission for the continuation of those proceedings was not contentious and orders to that effect were made by the judge at the hearing of the appellant's application on 14 March 2016. The judge heard full argument on the application as regards the fourth notice and reserved judgment, which he handed down on 31 March 2016.

Legislation

29. Before considering the judgment and the submissions made on this appeal, it is necessary to consider in more detail the relevant statutory provisions.
30. It is convenient to look first briefly at those provisions concerning company voluntary arrangements. The relevant provisions are contained in Part 1 of the Insolvency Act 1986. In the case of a company which is not in administration or liquidation, the directors may put a proposal for a CVA to the company's creditors. The company must appoint an insolvency practitioner as a nominee who must submit a report to the court stating whether in his opinion the proposed CVA has a reasonable prospect of being approved and implemented. If that is his opinion and he considers that a meeting of creditors should be held, the meeting must be held on not less than 14 days' notice but no later than 28 days after the nominee's report has been filed in court (Insolvency Rules r.1.9). If the proposal is approved at the meeting by the requisite majority, it becomes binding on all creditors, subject only to the power of the court under section 6 of the Act to challenge it.
31. Importantly for present purposes, the making of a CVA proposal does not bring into effect any moratorium on legal process against the company or its property, save in the case of "an eligible company" which means, subject to various exceptions, "a small company" for the purposes of section 382 of the Companies Act 2006. In such a case, a moratorium is not automatic but may be obtained by complying with the procedure set out in paragraphs 6-7 of schedule A1 to the Act. The provisions of schedule A1 governing a moratorium for eligible companies are complex and run to 45 paragraphs.
32. There has been considerable debate whether as a matter of policy a moratorium should be available to a company which is not in an insolvency process in circumstances where its directors propose a CVA. While some jurisdictions, notably the United States, have embraced the notion of a "debtor in possession" having protection against legal process while a proposal to rescue the company or its business is formulated, it has proved controversial in this country. The moratorium provisions for a small company promoting a CVA, contained in section 1A and schedule A1, were introduced by the Insolvency Act 2000. In 2009 the Insolvency Service issued a consultation document "Encouraging Company Rescue – A Consultation", inviting views as to whether a moratorium regime ought to be introduced for medium and large companies. Following responses to the consultation, the Government decided not to take steps to extend the provisions for a moratorium.
33. Fresh proposals for a wider moratorium for companies in financial difficulties were published last year by the Insolvency Service in a consultation document, "Review of the Corporate Insolvency Framework". The responses to the consultation are currently being assessed, before any firm proposals are published. Such proposals would require primary legislation.
34. As regards administration, I have already mentioned that an administrator may be appointed either by an order of the court or by an out of court process. The provisions for the appointment of an administrator by the court are contained in paragraphs 10-13 of schedule B1 to the Insolvency Act and require an application for an administration order to be filed with the court, followed in due course by a hearing. A moratorium will automatically arise on the filing of the application and last until the application is granted or dismissed or until an administration order takes effect (paragraph 44(1)).
35. The appointment of an administrator by the holder of a qualifying floating charge is dealt with in paragraphs 14-21 of schedule B1. The holder of the floating charge must file with the court a notice of appointment and other documents as provided in paragraph 18. The appointment of the administrator takes effect when the requirements of paragraph 18 are satisfied (paragraph 19). Paragraph 44(2) provides for an interim moratorium from the time when a copy of a notice of intention to appoint an administrator under paragraph 14 is filed with the court until either the appointment of the administrator takes effect or five business days have expired without an appointment. The purpose of the moratorium is to protect the company and its assets in those cases where a floating charge holder has not fully complied with the requirements of paragraph 18 at the time of filing the notice of appointment.
36. Paragraphs 22-34 make provision for the appointment of an administrator by the company or its directors. Because the holder of a qualifying floating charge has a prior right to appoint an administrator, paragraph 26(1) requires the company or its directors to give at least five business days' written notice of the intention to appoint an administrator to any holder of a qualifying floating charge or any person who is or may be entitled to appoint an administrative receiver of the company. Under paragraph 27, the company or its directors (as the case may be) must file with the court as soon as reasonably practicable a copy of the notice, accompanied by a statutory declaration complying with the provisions of paragraph 27(2) and (3). By paragraph 28, an appointment of an administrator may not be made by the company or its directors unless there has been compliance with paragraphs 26 and 27 and either the period of at least five business days' notice has expired or each person to whom the notice has been given has consented in writing to the appointment. The company or its directors may not appoint an administrator after the period of ten business days from the date on which a copy of the notice of intention to appoint is filed with the court.
37. An interim moratorium automatically arises on the filing of a copy of the notice of intention to appoint with the court, as provided by paragraph 44(4):

"This paragraph also applies from the time when a copy of notice of intention to appoint an administrator is filed with the court under paragraph 27(1) until—

(a) the appointment of the administrator takes effect, or

(b) the period specified in paragraph 28(2) expires without an administrator having been appointed."

The period specified in paragraph 28(2) is ten business days beginning with the date on which the notice is filed with the court.

38. It is thus apparent that the interim moratorium which arises in the case of a proposed appointment of an administrator by the company or its directors is directly linked to the existence of a qualifying floating charge or of a person entitled to appoint an administrative receiver, to whom notice of the proposed appointment must be given under paragraph 26. If there is no qualifying floating charge and no person who may appoint an administrative receiver, no occasion arises for the giving of a notice of intention to appoint an administrator or to file a copy of any such notice with the court. In those cases, there is no moratorium prior to the appointment of the administrator by the company or its directors.

The judgment

39. The challenge to the fourth notice made by the appellant was on the basis that Mr Davis did not have a fixed or settled intention to appoint an administrator but, at most, had an intention to do so only if the CVA proposal was not approved by creditors. It was submitted that, a fortiori, he was not entitled to have filed the earlier notices of intention when the intention to appoint an administrator was even less certain.
40. In rejecting the appellant's case, the judge focused particular attention on the use of the word "proposes" in paragraph 26(1). He recorded counsel for the appellant as submitting that the word "proposes" in paragraph 26(1) should be read as "intends". In support of this submission, counsel prayed in aid the heading of paragraph 26 ("Notice of intention to appoint"), the content of paragraph 27 (which refers to a person giving "notice of intention to appoint under paragraph 26") and the provisions of the relevant Insolvency Rules and prescribed forms.
41. The judge said at [41] that the word "proposes" could not be read as "intends" and held at [43]:

"The recorded decision [of the director] in my judgment is enough to satisfy the requirement that the director "proposes" to appoint. In my judgment a director may propose to do something without having any settled intention to do that thing. If he proposes to do something he is open to other outcomes. In my judgment a director may "propose" alternatives. On the facts of the present case, I can see nothing to prevent a director proposing both a CVA and an administration."

42. The judge considered that this construction of paragraph 26 was compatible with the duty of a director to act in the bests interests of the creditors of the company when it is insolvent. He accepted the submission of counsel for the company that:

"directors when completing form 2.8B, asking themselves if they "intend" to appoint an administrator for the purposes of the statutory declaration, are entitled to answer affirmatively, but keep searching for alternative means to ensure the continued existence of the company. He submits that they are entitled, at the point of making the statutory declaration, to hold on to the hope that alternatives will appear in the full knowledge that if one does they would be free to abandon the administration process."

43. By contrast, the appellant's case would, if accepted, have "the effect of requiring a director to surrender any real hope of an alternative before serving and filing the notice".
44. The judge observed at [44]:

"It seems to me that the best interests of creditors may very well require a director to serve notice on the relevant parties at a time when he clings to the hope that administration will not be necessary".

Submissions

45. At the hearing of this appeal, only the appellant was represented. As earlier mentioned, the company went into administration in December 2016, and the administrators' solicitors informed the court shortly before the hearing of the appeal that, in view of the lack of funds in the administration, the company would not be represented. However, the court had the benefit not only of the judgment but of a full skeleton argument prepared on behalf of the company by David Mohyuddin QC and Ian Tucker and filed in June 2016.
46. The submissions on behalf of the parties, including those made by counsel for the company in their skeleton argument, substantially repeat those made to the judge.
47. The appellant submits that at the time of giving notice of intention to appoint an administrator, the company or its directors must have a fixed and genuine intention to appoint, although a subsequent change of circumstances might result in a change in that intention. A notice is not to be given if one or more alternatives are being considered or pursued and an administrator will be appointed only if those alternatives fail. The operative word "proposes" in paragraph 26(1) has the same meaning as "intends", as the terms of paragraphs 26 and 27, and the relevant rules and prescribed forms, show. Reliance is placed on the limited circumstances in which a moratorium may be obtained when a CVA is proposed, being confined to a CVA proposed by an "eligible company" (as defined). Mr Lopian for the appellant submitted that, if the judge were right, an ineligible company would be able to get round its ineligibility for a moratorium by the expedient of giving notice of intention to appoint when the appointment would be made only if the CVA failed. The judge was wrong to dismiss this as "immaterial".
48. Counsel on behalf of the company in their skeleton argument supported the judge's reasoning. They submitted that a company or its directors were obliged to give a notice of appointment when they propose to appoint an administrator as one of a number of alternatives or where they have a conditional intention to do so. This, they submit, is consistent with the ordinary meaning of "proposes" in paragraph 26(1), which contemplates that the company or its directors may propose to do alternative things, hoping that the best outcome can be achieved and, failing that, working down a hierarchy of alternatives. If "proposes" is to be read as meaning "intends", it is sufficient for there to be a conditional intention, for example on the failure of a CVA proposal. This construction is in the interests of creditors and consistent with the duty of directors to have regard to the interests of creditors when a company is or is likely to become insolvent. The appellant's construction would hamstring a director who knew there was a prospect of an alternative strategy that would be better for creditors than an administration.

Discussion

49. The lynchpin of the judge's reasoning was the use of the word "proposes" in paragraph 26(1). It was not a synonym for "intends", and "a director may propose to do something without having a settled intention to do that thing" (para. 43 of the judgment).
50. I am unable to accept the judge's approach for a number of reasons.
51. First, in the context of paragraph 26, "proposes" and "intends" are, in my judgment, synonyms. While paragraph 26(1) requires a person who proposes to make an appointment to give written notice to the persons there specified, paragraph 26(2) (as amended by the Deregulation Act 2015 with effect from 1 October 2015) refers to such person as "[a] person who gives notice of intention to appoint under sub-paragraph (1)". The same form of words is used in paragraph 27(1), while the heading to paragraphs 26-28 is "Notice of intention to appoint". The judge dismissed these references as "simply shorthand references to a paragraph 26 notice". While true, that does not explain why the notice is repeatedly described as a notice of intention, if the word "proposes" meant something different from "intends". In my view, the natural reading of these provisions is that a single meaning was intended. This is certainly how the framers of the relevant Insolvency Rules and prescribed forms understood the paragraphs.
52. Second, I have difficulty in seeing that, either as a matter of ordinary language or in the context of paragraph 26, there is a significant difference in the meaning of a person proposing to do something and a person intending to do that thing.
53. Third, the real issue is, whichever word is used, whether the person giving notice must unconditionally propose or intend to appoint an administrator or whether that person may propose or intend to do so as one only of two or more alternatives or, as here, only if the CVA proposal is not approved. Depending on the context either word could connote each of these meanings. By itself, one of those words is no more certain in its meaning than the other.
54. Although the judge based his decision primarily on this linguistic point, he rightly had regard to other features in the overall context. Provisions such as these do not exist in a vacuum but are enacted both as part of the legislation as a whole and in the context of a wider legal background. For this reason, the judge took account of the duties of directors of insolvent companies, which I would certainly accept as part of the relevant background.
55. There are, however, other factors which the judge dismissed or did not consider which, in my judgment, are not only relevant but require the issue to be decided in the appellant's favour.
56. First, the purpose of giving notice is both limited and specific. Notice is to given, and a copy of the notice is to be filed in court, only if there is a person with a prior right to appoint an administrator. The purpose of the notice is to enable that person to exercise their prior right of appointment. The purpose of filing a copy of the notice in court, and the purpose of the interim moratorium triggered by filing the copy, is to protect the company and its assets while that person decides whether to appoint an administrator, and if he decides not to do so, to provide the same protection pending an appointment by the person giving the notice. If the scheme of the legislation envisaged that an appointment by the company or its directors might well not follow in the absence of a prior appointment, it is difficult to discern the real purpose of the interim moratorium.
57. If there is no person to whom notice must be given under paragraph 26(1), there can be no interim moratorium. If the company in this case had not granted a qualifying floating charge, there could not have been an interim moratorium pending consideration of the CVA proposal. This confirms the limited purpose of both the notice and the interim moratorium and supports the view that notice was to be given only if the company or its directors had a settled intention to appoint an administrator.
58. Secondly, paragraph 26(1) obliges a company or its directors to give notice if it or they propose to appoint an administrator. This works easily, and is readily explicable, if the obligation is triggered by a settled intention to appoint an administrator. It becomes rather less so if the appointment is a possibility only. How strong a possibility must it be before the obligation to give a notice arises? A company proposing a CVA might have the appointment of an administrator in mind as the probable or a possible alternative if the CVA is not approved but might well wish to await events before deciding on the right course to follow. If the judge is right, notice must in those circumstances be given. In that case, the company faces the prospect that the person to whom notice is given will exercise its right to appoint an administrator, thereby frustrating the proposed CVA.
59. Thirdly, the circumstances in which a company may obtain the benefit of a moratorium in aid of a proposed CVA are, as discussed above, strictly limited to an eligible company that takes the steps required by schedule A1. If the judge is right, and as the facts of this case demonstrate, any company proposing a CVA that happened to be subject to a qualifying floating charge could obtain a moratorium by giving and filing one, or successive, notices under paragraphs 26 and 27. As earlier discussed, the circumstances in which a moratorium should be available to a company and the protections that should available to creditors raises policy issues that have been the subject of extensive consultation. Legislation extending the availability of a moratorium, subject to safeguards, may well be forthcoming. But, on the legislation as it currently stands, the policy is to restrict a moratorium to an eligible company proposing a CVA. The appellant is right that the decision under appeal would provide an indirect means of obtaining a moratorium that is not directly available.
60. The judge thought that this was an immaterial consideration. I disagree. In construing the terms of paragraphs 26 and 27, it is material to take account of the impact of the rival constructions on other parts of the statutory insolvency regime, particularly when contained in the same Act. In my view, this is a strong pointer that the construction advanced by the appellant is correct.
61. For these reasons, I have concluded that the judge's order cannot stand. I would allow the appeal and order that the copy of the notice of intention to appoint filed with the court on 4 March 2016 be removed from the court file.
62. There was some discussion at the hearing both below and in this court as to whether it had become common practice to give and file one or more notices of intention to appoint in order to obtain a moratorium while a company proposes a CVA or seeks some other solution to its financial problems. In an email provided to the judge, a partner in the company's solicitors, who have considerable experience in insolvency and restructuring, stated that it was "not uncommon in situations like this where the success of a CVA is uncertain to run a parallel process and seek protection in that period". At our request, Mr Lopian undertook research after the hearing as to any generally available discussion of this possible practice, but was able to find only very limited material. I am grateful to him for doing this.
63. There was discussion in argument before us as to whether the filing of the copy of the notice had been an abuse of process and whether it should be removed from the file on that basis. Mr Lopian on behalf of his client was anxious that it should be clearly understood among insolvency professionals that giving and filing a notice when there was not a settled and unconditional intention to appoint an administrator was not permitted. He submitted that this required the filing in this case to be stigmatised as an abuse of process.
64. The ground for the order to remove the copy of the notice from the court file is, in my judgment, the straightforward ground that the notice was invalidly given, because the statutory pre-requisite of a settled intention to appoint was not satisfied. The notice was not validly given under paragraph 26 nor was a copy of it validly filed with the court under paragraph 27, with the result that the interim moratorium was not validly invoked. To give a notice and file a copy with the court in these circumstances is no doubt, in a technical sense, an abuse of the court's process. But it is not necessary in this case to say more. There is no reason to suppose that either Mr Davis or the experienced insolvency practitioners and solicitors advising him and the company did not believe that he was entitled to give and file the notices. For the future, it will be clear, by reason of this court's decision, that a conditional proposal to appoint an administrator does not entitle or oblige a company or its directors to give a notice under paragraph 26 of schedule B1.

LORD JUSTICE FLAUX:

65. I agree.

LORD JUSTICE JACKSON:

66. I also agree.