Jersey Unreported Judgments

[2005]JRC035D

royal court

(Samedi Division)

31^st March 2005

IN THE MATTER OF AN APPLICATION pursuant to Article 48 of the Bankruptcy (Désastre) Jersey) Law, 1990.

AND IN THE MATTER OF A.G. (Manchester) Limited (formerly known as the Accident Group Limited) (in Liquidation)

Application by the Representor to amend the undertaking given on 21^st June, 2004, to permit that documents disclosed by Equity Trust (Jersey) Limited be disclosed to the Official Receiver and Secretary of State and thereby comply with the provision of the Insolvency Act 1986 and the Company Directors Disqualification Act 1986, and that no other party need to be convened to this Representation.

Advocate A.J.N. Dessain for the Liquidator.

judgment

the bailiff:

1.        This is a Representation of Paul Stanley who is a Chartered Accountant and Licensed Insolvency Practitioner and one of the joint liquidators of A G (Manchester) Limited (formerly known as the Accident Group Limited).  The Representation follows certain disclosure orders made by the Court on the 21^st June, 2004, when Equity Trust (Jersey) Limited ("Equity Trust") a Jersey company carrying on business as the provider of trust services, was ordered to furnish certain information to the liquidators.  In securing the disclosure orders, Mr Stanley gave an undertaking through his counsel to the Court in the following terms:-

"to ensure that other than with leave of the Royal Court any information obtained pursuant to this or any Order of this Court shall only be used for the purposes of the Company's liquidation including (without prejudice to the generality of the foregoing) for examining or the conducting of examinations of persons whether in or out of this Court and for instituting and pursuing civil proceedings or obtaining further orders in Jersey or England and Wales and pursuing such proceedings in such other jurisdictions as the Representor considers appropriate or the seeking of further information from prospective examinees on a voluntary basis...."

2.        Further disclosure orders were made on the 7^th February, 2005, and on the 23^rd February two witnesses were examined.  Equity Trust has also made disclosure of certain documents to Mr Stanley.  Unfortunately, at the time when the application to the Court was made on the 23^rd June, 2004, it was not disclosed that Mr Stanley had received, on or about the 23^rd March, 2004, a letter from the Insolvency Service in the United Kingdom in these terms:-

"A G (Manchester) Limited (formerly the Accident Group Limited) in liquidation. 

As you are aware, the Official Receiver is currently in the process of fulfilling his statutory duty to investigate the reasons for the failure of the above company.  As joint liquidators, certain documents and information will no doubt come into your possession that will be of interest and assistance to the Official Receiver in his enquiries and therefore I would be grateful if any such documents and information could be made available to the Official Receiver. 

I would also be grateful in you could supply me with the names of the people who have/are going to interview together with the dates of interview and contemporaneous notes of the same".

3.        There was nothing surprising in itself about that letter.  It was a standard form of request to the liquidator to supply information obtained during the course of the liquidation so as to enable the Official Receiver to carry out his functions.  It was expressed, very politely, as a request, but in fact there was a statutory obligation pursuant to the Insolvency Act 1986 to assist the Official Receiver in that way.  What is however surprising is that the existence of that letter, and the existence of the statutory duty to assist not only the Official Receiver but also the Secretary of State pursuant to the provisions of the Company Directors Disqualification Act 1986, were not disclosed to the Court.  The undertaking is that information shall only be used "for the purposes of the Company's liquidation".  We are not persuaded that passing information to the Official Receiver and the Secretary of State pursuant to statutory obligations can properly be regarded as falling within the four corners of that commitment.  It is a serious matter to break down the duty of confidentiality which a trustee owes to its client.  Where a liquidator persuades this Court that the duty of confidentiality must yield to some other more pressing public interest, and gives an undertaking to the Court in relation to the use of any information obtained, the greatest possible care should be taken to ensure that nothing is done outside the ambit of that undertaking.  We accept in this case that the liquidator has acted in good faith, but the Court ought to have been told of the statutory obligations of a liquidator in England and of the specific request of the Official Receiver at the time when the application to the Court was made.  Furthermore, account of these statutory obligations should have been taken in the drafting of the undertaking offered to the Court by the Liquidator. 

4.        We do not wish to cause Mr Stanley difficulty with the Official Receiver or the Secretary of State.  We accept that he has acted in good faith but without giving adequate consideration to the precise terms of the undertaking.  In all the circumstances it is appropriate to consent to the release of this information and copies of these documents.  We will therefore grant the prayer of the Representation and will grant Mr Stanley leave retrospectively to amend his undertaking so as to allow the documents disclosed by Equity Trust to be produced to the Official Receiver and Secretary of State for inspection to the extent that they have not already been disclosed.  This will enable Mr Stanley to comply with his duties under the Insolvency Act 1986 and the Company Directors Disqualification Act 1986 respectively.

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