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Search the history of over billion web pages on the Internet. Insolvency Intelligence INCORPORATING INSOLVENCY LAWYER Insolvency Intelligence is a refereed journal VOLUME 26 NUMBER 5 Payment Protection Insurance Claims and Insolvency John Briggs James Boddy* Bankruptcy;. Search the history of over billion web pages on the Internet.

One such difficulty is ascertaining whether the borrower had PPI in the first place. The office holder s record of the many loans and credit agreements taken out by the borrower is often incomplete and in any event PPI can be well disguised in the underlying documentation. In practice, the first step is to provide the borrower with a detailed questionnaire seeking information on the various loans taken out, the relevant circumstances and especially PPI. This is followed by analysis of the information and any documents provided.

Sometimes this process produces sufficient information to advance a PPI claim. Where it does not, various strategies have been adopted, ranging from a request for information under the CCA , 8 to a speculative claim being advanced and the lender only then confirming the existence of PPI. Clearly the more detail supporting the PPI claim the better, but instances of lenders paying out on PPI have been known to occur even where the borrower has merely enquired as to whether PPI was present on the relevant loan.

This is an area where lenders are often motivated as much by the need to clear their books of potential liabilities as they are by the legal merits of a particular complaint.

Bankruptcy The RPBs Note advises that where a PPI policy has been sold prior to the date of the bankruptcy the mis-selling claim vests in the trustee in bankruptcy because the mis-selling took place prior to bankruptcy.

Discharge makes no difference. This guidance is clearly correct and accords with the decision in Ward v The Official Receiver in where D. Khan ruled that the PPI claim was an asset in the bankruptcy since it constituted property within the meaning of s. He considered it was either an interest incidental to property or alternatively it was a thing in action. For good measure, the Insolvency Service takes the view that a PPI claim is a bankruptcy asset and has issued its own brief guidance and has cautioned bankrupts from using claims management firms because they may remain responsible for the commission charge if an award is paid to the OR or trustee in bankruptcy.

In the first category fall the R3 Standard Conditions. These define property as having the meaning given to it in s. Arrangement Assets are defined by para 26 as: Property other than excluded assets belonging to or vested in the Debtor at the date of commencement of the Arrangement which would form part of the Debtor s estate in a bankruptcy shall be subject to the Arrangement and be an asset thereof.

For instance, after identifying specific excluded assets the IVA proposal goes on to say: I do not have any further assets that are to be excluded from the Arrangement. In addition, the proposal will identify the debtor s assets and particular assets to be excluded no doubt in compliance with r. PPI claims could therefore fall into the black hole between Included assets and Excluded assets.

After-acquired Assets is defined in cl. It is hardly the case therefore that the definition of after-acquired assets would include a PPI claim existing or notionally existing at the date of the commencement of the IVA and arising out of a pre-existing loan agreement since it is an asset which belonged to or vested in the debtor at that time.

Alternatively, better still, a windfall provision along these lines: In the event that I shall come into possession of any monies or assets of value whatsoever, including any inheritance or bonus, during the period of the arrangement or there were assets owned at the date of the arrangement which have been inadvertently omitted, I will inform the Supervisor of such windfalls or assets and these are to be included in the arrangement to the extent that the creditors claims are paid up to p in the 1 plus the costs of the arrangement.

However, the Supervisor will have the discretion to exclude windfalls if the amount is less [than] and it would not be cost effective to distribute it to the creditors. The first of the above two modifications is often HMRC driven. Since the Protocol Standard Conditions state that: The conditions are part of the arrangement, if any ambiguity or conflict arises between the conditions and the proposals and any modifications to it, then the proposal whether modified or not will prevail, 17 the modified windfall clause applies to the IVA and would catch the PPI claim.

Duty of debtor to disclose the PPI claim This is hardly touched upon in the RPBs Note save by reference to the office holder enquiring of the debtor at an early stage about such a possible claim. The importance of this requirement is signified by the fact that the statement must be verified by a statement of truth made by the debtor r.

Its importance is also signified by the fact that any false representation or fraudulent doing or omitting to do anything for the purpose of obtaining the approval of his creditors to a proposal for a voluntary arrangement constitutes an offence even if the proposal is not approved and the person guilty of an offence under the section in question, s.

Given that PPI claims arising out of loan agreements are all too common in the consumer debt context, it would also be expected that a nominee in preparing his report under s. In this way, the nominee could ascertain the possibility of such a PPI claim even if the debtor is unaware of circumstances which may give rise to his having such a claim.

We are aware that in some IVAs, where the debtor advises the Supervisor that he never obtained PPI, the debtor is asked to sign a declaration to this effect. The issue arises, however, of what the Supervisor can do about it if the debtor is unwilling to co-operate by refusing to seek a PPI repayment or sign such a declaration or if the Supervisor discovers that the debtor has a PPI claim of whose existence the latter was genuinely unaware.

The obvious recourse in the case of a debtor who is unwilling to co-operate by refusing to seek a PPI refund whether payable into the IVA or available as set-off or to sign a declaration that he never obtained PPI, is for the Supervisor to institute the provisions dealing with breach or non-compliance by the debtor with his IVA obligations.

The debtor is regarded as in breach of the IVA arrangement if, among other things, he fails to do anything that the Supervisor may for the 5. The requirement to sign a declaration that the debtor never obtained PPI would no doubt be regarded as reasonable within the meaning of cl. On the other hand, what can the Supervisor do about it if the debtor is co-operative but inadvertently omitted to mention the PPI claim because he knew nothing about it, and the IVA arrangement makes no provision for its inclusion within the assets available for creditors?

Inadvertent failure to include a PPI claim with the result that the benefit of such claim is not included in the IVA for creditors would nevertheless provide grounds for a default bankruptcy petition by the Supervisor or a creditor bound by the arrangement under s.

The critical phrase is information which contained material omissions. So, despite the earlier use of the words false and misleading, the application of the section does not depend upon proof of culpability; culpability may however become relevant when the court exercises its discretion for or against making a bankruptcy order.

This was so held by Jacob J. The shares were not sold and the Supervisor therefore presented petitions and bankruptcy orders were made. On the debtors appeal, and for the purpose of the appeal, it was agreed that it was through no fault of the debtors that the shares were not sold.

In dismissing the debtors appeal, Jacob J. In the Judge s view, it would be a startling proposition that creditors should be bound by an IVA which they have accepted in lieu of bankruptcy when they have been given false information for whatever reason. It remains the case however that the seriousness of the omission and the effect that it would have on creditors, and how they would have voted, is an issue which the court would have to consider in the exercise of its discretion as to whether to make a bankruptcy order.

Since IVA arrangements usually have a variations clause, the sensible course is for the Supervisor to indicate to the debtor that he should agree to a modification of the IVA arrangement, failing which the creditors are likely to vote for a bankruptcy petition to be presented.

Set-off in IVAs and bankruptcy It will often be the case that a debtor who has a PPI claim against a financial institution has an outstanding loan and the PPI formed an intrinsic part of the transaction, as described in the Introduction above.

The issue of set-off arises. It is with regard to this topic that the RPBs Note is at its most cautious describing mutuality of dealings as a most complicated area of law depending among other things on the nature of both the original debt and the mis-sold PPI proceeds, the identity of the parties and in the case of an IVA, the terms of the IVA.

Office holders are told that they may consider seeking legal advice when in doubt about whether set-off should apply. Various arguments have been raised as to why set-off in a bankruptcy or IVA will not apply or, on the other hand, will apply.

The arguments are dependent to an extent on the meaning of mutual dealings in s. The Note is most coy in relation to the latter, describing this cl. Without being exhaustive we will briefly consider some of the set-off arguments. In the context of IVAs, three main arguments have been advanced by the financial institutions in support of set-off, which are broadly as follows: 1 Under the terms of the IVA, the creditor only agreed to accept the reduced sum on the basis that the debtor agreed not to pursue any claim of any nature against the creditor [unfair to deny the right of set-off].

Unfair to deny the right of set-off It is a matter of interpretation of the IVA proposal in question whether set-off expressly or impliedly operates or is excluded. Set-off is not required by the IVA provisions in Pt 8 of the IA compare the special protection for secured and preferential creditors in s.

Since an IVA is a form of statutory contract 21 it would be possible for the terms of the IVA to exclude its operation. While the purpose of insolvency is to do substantial justice between the parties, per Parke B in Forster v Wilson 22 and Lord Hoffmann said in Stein v Blake 23 at that it is often said that the justice of the rule is obvious, and it has been part of the English law of bankruptcy since at least the time of the first Queen Elizabeth, he acknowledged that the rule is by no means universal.

It is significant that both the R3 and Protocol Standard Conditions contain set-off provisions. It is argued by those against the application of set-off that the basis of the IVA is that creditor claims are not compromised until the IVA is successfully completed and all the debtor s assets reduced into the IVA.

There is no settled account at the effective date of the insolvency. However, the fact that there is no compromise for creditor claims until completion is a distinction with bankruptcy, but not a true difference in the scheme of things.

The purpose of a bankruptcy and a composition with creditors is to give rise to an orderly administration of debtors affairs which would likely be defeated if the debtor were free to litigate with his creditors.

The settled account as described by Lord Hoffman in Stein v Blake in relation to s. In an IVA, the creditor claims have to be evaluated, assets collected in and funds distributed in the expectation that the IVA will be successful even if this may not eventually be the case. This is not, it is submitted, a reason why set-off cannot apply.

Clause 17 6 of the Protocol Appearing in the Standard Conditions under the heading Dividends and Claims, in Pt VII, this clause reads as follows: Where any creditor agrees, for whatever reason, to make a repayment to the debtor during the continuance of the arrangement, then that payment shall be used solely in reduction of that creditors claim in the first instance. If such payment results in the creditor s claim being entirely extinguished after the application of set-off any surplus will be treated as an after-acquired asset and offered to the Supervisor for the benefit of the arrangement.

As para. The authors believe that within the IVA industry various arguments have been put forward why cl. Another, that the PPI repayment is not repayment but compensation, or that one element, compensatory interest presumably notional statutory interest is not repayment even if return of the premium paid and historic interest on the premium paid is repayment. Clause para. It seemingly requires the creditor to agree.

What if there is no agreement? Does a judgement mean that a creditor is taken to agree? Or is there no set-off in such a case? In PPI claims, the issue of agreement hardly arises in practice since there is usually agreement between the debtor or his agent with the lender over the quantum of redress, following an offer by the lender, but only disagreement in the insolvency context over whether set-off applies.

As to the argument that there has in truth been no agreement to make redress since the banks have been compelled by FSA guidance to make the PPI refund we believe the following observations are relevant. The background is that FSMA , ss. The Policy Statement was challenged as unlawful by the BBA arguing that the FSA was seeking to augment the specific rules that were in place at the time the sales were made and that the FSA was seeking to circumvent the statutory procedure for consumer redress in s.

The court disagreed. In any event, the guidance does not purport to set up a compulsory industry-wide review. Only firms that have identified recurrent or systemic problems are advised to take further steps in giving guidance on how to undertake them. Although many of the provisions of Appendix 3 use the word should, they are almost all in the form of Guidance bearing the categorisation G as opposed to R or E, e.

Once the financial institution has considered the complaint, it makes an offer of redress which the debtor is entitled to accept or reject and in the latter case, have the matter referred to the FOS. In the circumstances we believe it is very likely a court would regard acceptance by the complainant as agreement. Before moving on in this topic of set-off, it is instructive to have regard to the redress provisions in DISP Appendix 3.

This reflects the general position at law equitable set-off, legal set-off or contractual set-off and in insolvency where set-off is regarded as doing substantial justice between the parties see the dicta of Lord Hoffmann in Stein v Blake 28 As stated, agreement in cl. Not payment. So, is the set-off provision limited to an over-charge type situation regarding a loan or provision of services or goods? This appears likely since the Protocol Standard Conditions were a BBA induced solution for straightforward consumer IVAs and the thinking behind this provision may be situations where a bank has overcharged interest on an account or such like.

Agreement therefore will likely generate repayment in this sense and so giving the clause a purposive effect set-off applies.

As would be the case with costs. It is to be noted that the Protocol cl. It reads: 7 1 [Application] This Paragraph applies where before the commencement of the Arrangement there have been mutual credits, mutual Debts or other mutual dealings between the Debtor and any Creditor other than in the circumstances to which paragraph 79 of these Conditions apply. The addition of the words or other mutual dealings to mutual credits and mutual debts in what is now s.

In Booth v Hutchison 31 Malins VC said that the additional words: were intended to give a more extended right of set-off than previously existed and in Peat v Jones, 32 Sir George Jessel said: Now the enactment as to mutual credit is a very old one, first appearing in 5 GEO C30, but the whole tendency of the subsequent legislation, as of the legislation in respect of provable debts, has been to extend the principle upon which it is founded.

All that is necessary therefore is that there should have been dealings in an extended sense which include the commission of tort or the imposition of statutory obligation which give rise to commensurable cross-claims. In Gye v McIntyre itself, the one party was liable to the other for money lent and the cross-claim was for damages in tort for fraudulently inducing the borrower to enter into a separate contract to which the lender was not a party.

As can be seen from the above extract, improper behaviour in the nature of fraudulent misrepresentation is cited by Lord Hoffmann as an example of a dealing, for the purpose of mutual dealings. The liquidator brought an action of detinue for the cigars. In discussing whether this was a case of mutual dealings, Lord Esher said: On the one side there was the deposit of goods to secure a debt. There are, no doubt, matters which give rise to claims, but are not dealings within the section.

If one man assaults another or injures him through negligence, that gives rise to a claim, but it is not a dealing; but I am disposed to think that whatever comes within the description of an ordinary business transaction would be a dealing within the section If the claim on one side of the section and the counterclaim on the other were such as would both result in a money claim, so that for the purpose of the action there would be merely a pecuniary liability on each side, the case would, I think, come within the section.

I should, speaking for myself, desire to give the widest possible scope to the. So, while the commission of a tort can constitute a dealing, an assault is not a dealing even though it gives rise to a claim. This affords the distinction between the cases such as Manson v Smith 36 in which misfeasant directors were denied the right of set-off and see further Smith v Bridgend County BC 37 , and the current scenario where in general terms the lenders have been guilty of breach of duty or misrepresentation.

Misappropriation of assets or theft of money or a conversion of property is not a dealing. It has been argued that the offer of redress is made after the IVA commences and that this too takes it outside the mutual set-off provisions.

This argument is not sound. While the requirement of mutuality in insolvency set-off means that debts or claims arising from other dealings must be commensurable, in other words ultimately sounding in money, that does not mean that they must be in possession or liquidated at the decisive date, provided that they exist as contingent at that date and are of a kind which will ultimately mature into pecuniary demands.

This is taken from the Australian case of Gye v McIntyre but the same principles are to be drawn from English case law which particularly refers to the need for the office holder to take an account and to estimate the value of claims. While this basis of set-off will be relevant in a non-insolvency context, in an IVA the respective rights of creditors and debtor are governed by the statutory hypothesis of being bound by the terms of an arrangement made by the debtor at the meeting and binding every person who is entitled to vote at the meeting or would have been so entitled if he had notice of it as if he were a party to the arrangement s.

It is to be noted in this context that para. As Lord Hoffmann emphasised in Stein v Blake 43 bankruptcy set-off, unlike legal set-off between solvent parties, affects the substantive rights of the parties against each other, while legal set-off addresses questions of procedure and cash flow. Hence there can be no set-off in respect of a debt which at the date of the commencement of the bankruptcy or IVA has been assigned to some other person.

The authors are of the opinion, on balance, that set-off will apply in the typical case unless the lender assigns its debt before the commencement of the bankruptcy or IVA. Power and obligation to make PPI mis-selling claims and office holder s fees in the bankruptcy or IVA The RPB s Note deals at some length with the power and obligation to make PPI mis-selling claims and advises that this is dependent on the terms of the IVA and the likelihood of substantial benefit to the estate. Sub-para 8.

However, it is open to creditors to agree otherwise where they consider there to be a benefit to the estate. The concern of office holders alluded to in sub-para 8. The argument is that even if a successful mis-selling claim only results in set-off, there has been successful realisation of an asset for the benefit of all creditors as the financial institution will prove in the IVA for a substantially lower debt. In further support of this argument, it is said that the Supervisor has authority to assist the debtor with the PPI claim and an obligation to appropriately adjudicate on the set-off.

This process involves time and expense from which other creditors benefit by a higher dividend. While the authors have sympathy with the argument, it is not considered correct. It is the terms of the IVA which primarily govern the right to remuneration, set against the background of the bankruptcy legislation. Remuneration fixed as a percentage of realisations or realisable assets or further realisations is wording directed at the debtor s assets available for distribution subject to fees and expenses.

In other words, what are commonly called free assets. The set-off of a claim owed by the creditor is, on the other hand, a form of security in the creditor s hands and has a similar status. It is only the balance if any owed to the debtor which is assignable. In other words, only that element which can be regarded as a realisable asset: see the judgment of Lord Hoffmann in Stein v Blake. R In some jurisdiction, France is an example, it is regarded as giving a creditor a preference over other creditors.

R Ouseley J. I will take an example to illustrate the point. The company is a tenant of premises. A quarter s rent in advance falls due under the tenancy on December 25, The tenant company enters administration on January 1, The tenant trades from the premises up to, and after, it goes into administration.

The tenant is still trading on the next quarter day, March 25, The tenant ceases trading the next day, March 26, and hands the premises back to the landlord. Because 28 Stein v Blake [] 2 W. C This appears also to be the view of text book writers: see Derham on Set-Off at p. A right to be paid on that basis gives the landlord priority over other creditors and is a very valuable thing. If the above decisions are right, in relation to the tenant s trading from January 1, to March 24, , the landlord is not entitled to be paid rent as an administration expense.

Because the rent for that period accrued due in advance on December 25, which was before the tenant went into administration. That quarter s rent is not to be apportioned as between the period before January 1, and the period after January 1, The landlord will of course remain entitled to be paid the full amount of the rent due on December 25, , pari passu with other unsecured creditors. Yet, in relation to the tenant s trading for one or two days on March 25 and 26, , the landlord is entitled to a full quarter s rent.

Because the quarter s rent accrued due on March 25, and is not to be apportioned in relation to the period of one day before March 26, and the period after March 26, Is this a sensible result? I do not think so. I think a sensible result would be to entitle the landlord to be paid rent as an administration expense for the period from January 1, to March 26, That is the period during which the tenant in administration retained the premises for the benefit of the administration.

The result produced by the two cases means that rent is not a liquidation. As it happens, in my example, by chance, the landlord gets a quarter s rent as an administration expense in a case where the tenant retained the premises for the benefit of the administration for just under three months.

And indeed, the same chance outcome occurs in practice in some cases. So is that alright then? The law should be principled. It would be perfectly possible to give many other examples where the operation of these two first instance decisions is unfair to either the landlord or the tenant in administration.

One cannot understand the legal principles which apply or ought to apply to rent as an administration expense unless one considers how we got to where we are today. That involves examining the allied concept of rent as a liquidation expense.

To do that one needs to understand the relevant decisions of the courts in the 19th century as well as the present statutory provisions. In the case of both liquidation expenses and administration expenses, there are today statutory provisions and insolvency rules dealing with two subjects.

The first set of provisions deals with the moratorium on creditors, including landlords, taking certain steps against the company. The second set of provisions deals with what are, and what are not, liquidation expenses and administration expenses. These two sets of provisions are sometimes considered in isolation one from the other.

But so far as rent as a liquidation expense is concerned, it was the first set of provisions creating a moratorium which first gave rise to the idea that post-liquidation rent could somehow be a liquidation expense.

The position today is that in order to understand when and how rent can be a liquidation expense or an administration expense, it is necessary to examine the moratorium provisions. Liquidation expenses The second was a liquidation case but it did not concern a lease or rent due under a lease. In Re Atlantic Computers, the court explained the statutory provisions in the 19th century, and today, which prevented a landlord taking proceedings to forfeit a lease vested in a company in liquidation or distraining for rent due under such a lease.

A landlord needed, and still needs, the permission of the court to do either of these things. The law as helpfully described in Re Atlantic Computers can be summarised as follows. If the landlord seeks permission to bring proceedings to forfeit the lease, for example for non-payment of rent whether accruing due before or after the commencement of the liquidation , he should normally be granted it: see at p.

This should be regarded as a case of a landlord claiming his own property. In the ensuing forfeiture proceedings, the court will consider the usual points which arise in forfeiture proceedings including any claim for relief from forfeiture.

Relief from forfeiture is normally granted on the basis that the arrears of rent are paid in full. If the landlord seeks permission to distrain for unpaid rent, then if there is nothing more and the landlord is merely an unsecured creditor for the rent whether accruing before or after the commencement of the liquidation then he should not normally be given leave to distrain.

But there may be something more. What if the lessee has continued to trade from the premises or otherwise has retained the premises for the benefit of the winding up. If the company in liquidation had taken on new premises or incurred new liabilities post liquidation, it would have to pay for them in full as a liquidation expense.

What is the difference between taking on a new debt and retaining premises where there is a freshly accruing obligation to pay rent. The 19th century cases held that if the liquidator retained the premises for the purposes of the liquidation, then the rent payable should be paid. It should be an expense of the liquidation. The landlord should be allowed to distrain for that rent if it went unpaid. This approach was laid down in a series of cases.

For present purposes, perhaps the most useful way of formulating the principle is in the judgment of Lindley L. Emphasis added. So, although the debt was actually incurred as a future debt when the lease was entered into, it should be regarded as a debt freshly contracted for the purposes of the winding up.

I also draw attention to the reference to the whole period during which the property is so retained or used. It will be necessary to come back to Re Atlantic Computers when I turn to deal with administration expenses.

However, staying with liquidation expenses, I will now refer to what was said on that subject in Re Toshoku. This decision of the House of Lords is a leading authority on liquidation expenses.

The detailed facts are not important for today s purposes. On the facts, a particular liability 5. The liquidator argued that notwithstanding that the liability fell within the wording of the rule, there ought to be a gloss on the wording of the rule.

It was said that to be a liquidation expense, the liability had to be: 1 within the wording of the rule; and also 2 a liability which was for the benefit of the winding up. It was submitted that this gloss was to be found in the Lundy Granite principle. In short, that argument was rejected. However, the fact that the argument was put forward led to Lord Hoffmann, giving the only speech in the House of Lords, discussing in detail the Lundy Granite principle.

He held that the Lundy Granite principle did not justify reading in a limitation on the operation of the express words in r and he decided the case accordingly. The actual decision in Re Toshoku is absolutely clear. If the liability is within the express wording of r then the liability is thereby a liquidation expense. There is to be no inquiry as to whether the liability was or was not for the benefit of the winding up.

Unfortunately, in my view, Lord Hoffmann s description of the Lundy Granite principle is not quite so clear and requires some thought and interpretation, at least in relation to some parts of what he said. But those are important parts. He referred to what Lindley L. He quoted the passage I have quoted above. At [29], he said that the principle was evolved on equitable grounds and expanded the concept of a liquidation expense.

He said that the principle was originally based on the statutory discretion to permit a landlord to distrain for unpaid rent but evolved to give the landlord a right to payment of the rent in full. He said that the area of discretion had hardened into principle and was well settled.

Building on this, Lord Hoffmann said at [38] that the question as to whether a landlord was to be paid rent as a liquidation expense was not a matter of discretion but was today a matter of entitlement, if the relevant qualifying criteria were satisfied. He disagreed with Nicholls L. This last point creates a potential difficulty. Is the landlord s right to rent as a liquidation expense included in the list of liquidation expenses in r.

If so, where? It may matter where it is put, because the list in r. If it is a liquidation expense which is not included in r. If r is not exhaustive, then can the court include other liabilities and by doing so promote them from being provable debts to expenses or even from being non-provable debts to expenses?

Lord Hoffmann made it clear that the list in r is mandatory in the sense that if the liability is within the list, it is not open to the court to take it out of the list. But is it exhaustive or does it list only some things which are liquidation expenses leaving it to the courts to apply some principle or other to include other things? This is where Lord Hoffmann is not completely clear. At [38] he refers to the court interpreting r to include rent pursuant to the Lundy Granite principle.

In the same paragraph he refers to the court treating as coming within para. He then goes on to say that possibly the principle might enlarge the scope of other paragraphs as well. So, can the court treat other charges as coming within the list? Can the court enlarge the list to include other charges? Perhaps we do not need to know the answers to all of these questions for the purposes of the present subject matter, which is rent as a liquidation expense.

However, the point is a fundamental one. There has been a readiness in one or two cases at first instance concerning administrations to hold that the court can decide to treat something as a liquidation or administration expense which is not within the relevant list.

My own inclination is to say that the three verbs used by Lord Hoffmann, interpret, treat and enlarge should be understood as follows. If a liquidator of a tenant company has to pay rent to a landlord under the Lundy Granite principle, the payment is a necessary disbursement within r. You can say it is treated as a necessary disbursement, if you like.

Further, it is probably open to the court to interpret the word incurred in r. I would therefore incline to the view that: 1. One last point about Re Toshoku.

Although the House of Lords held that in a case which fell within the Lundy Granite principle, the landlord was entitled to rent as a liquidation expense as of right and not as a matter of discretion, the court had a discretion as to when to allow the landlord to take action to recover this rent or, seemingly, when to direct the liquidator to pay this rent.

There might be good reasons why the landlord will have to wait to be paid. For the time being, that is what I want to say about rent as a liquidation expense. I now need to consider the question of rent as an administration expense. Let me start with the moratorium which affects a landlord of a company in administration. When can the landlord get permission from the court to bring forfeiture proceedings?

One might have thought that the court would apply the identical rule to that which it applies to a company in liquidation. Re Atlantic Computers says otherwise.

That case laid down guidelines which are well known. They are also detailed and I will not take time to set them out here. The reason for an approach different from the approach in the case of a liquidation is that there is a statutory purpose in relation to the moratorium in respect of an administration which is not identical to the statutory purpose in relation to the moratorium in respect of a liquidation.

Thus, if the giving of permission to forfeit would not impede the achievement of the purpose of the administration, then leave should normally be given: see at C D. If the giving of the permission to forfeit would impede the achievement of the purpose of the administration, then the court has to balance up all the competing considerations.

One important consideration is the proprietary right of the landlord to re-possess the premises. Apart from the court s ability to say yes, you may or no, you may not to the landlord seeking to forfeit, the court can say yes, on terms i. Let us look at what Nicholls L. He said such cases would frequently arise. He then said as to the ability to impose terms on the company or the administrator: For example, the permanent loss to a lessor flowing from his inability to recover his property will normally be small if the administrator is required to pay the current rent.

He suggested that such a term would be a normal term to impose. What did Nicholls L. Of course, he did not spell that out and to some extent it is open to interpretation.

Reverting to my initial example of the company entering administration on January 1 and giving up possession on March 26, , is current rent the rent for the period January 1, to March 26, or is it: no rent from January 1, to March 24, and then rent for the period form March 25, to June 23, I suspect that that is a tendentious way of putting the question. A less tendentious way of doing so is to ask: do you identify the current rent on a daily basis for the period in question or do you identify the current rent as that rent which contractually accrues during the relevant period?

I suspect that if Nicholls L. I add this warning. Nicholls L. It would not be right to impose a term which was not at least as favourable to the landlord as the landlord s entitlement to be paid rent as an administration expense; the term should not make the landlord s position worse. It may be right to impose on the administrator a term which is more favourable to the landlord.

For example, if current rent means rent calculated on a daily basis, might the court be prepared to add a further term that the administrator gives a minimum period of notice before the company gives up the premises and so that the administrator must pay rent during such period of notice even if the company gives up the premises before the expiry of the notice? I think I would be prepared to consider imposing such a term.

The guidelines in Re Atlantic Computers as to the grant of permission to bring proceedings against the company in administration remain generally apposite notwithstanding the amendments made to the law as to administration by the Enterprise Act and notwithstanding the decision in Re Toshoku as to the landlord s right to rent as a liquidation expense being a matter of entitlement and not of discretion: see Sunberry Properties Ltd v Innovate Logistics Ltd The court s ability to refuse permission to forfeit on terms that the company in administration pays current rent is of obvious practical significance.

It means that if the landlord does not get his premises back, he ought to be able to get current rent whatever precisely that means. However, that consideration does not deal with the case where the landlord does not want to get his property back but he does want to recover rent as an expense of the administration. So the next question is: when is the landlord entitled to receive rent as an administration expense otherwise than as a condition imposed on a tenant in return for the court refusing to give the landlord permission to forfeit?

The court in Re Atlantic Computers thought that the court had a discretion to confer, or not confer, on the landlord the right to receive rent as an administration expense. The House of Lords in Re Toshoku held that a landlord s entitlement to rent as a liquidation expense was not a matter of discretion; the right turned on the Lundy Granite principle. Since the decision in Re Atlantic Computers, the statutory provisions relating to administration have been amended by the Enterprise Act There are now detailed provisions dealing with administration expenses.

The new provisions, in particular, in r. It has been held more than once that what Re Toshoku had to say about r holds good for r.

Although some commentators have argued against this view, I consider that this is the view which will prevail. So what are the rules about rent as an administration expense?

A landlord is entitled not as a matter which is within the discretion of the court to rent as an administration expense if the 5. If I am right about how to interpret or apply r in relation to a liquidation expense, then the same result follows for r Accordingly, the list in r.

If the expense is within the list, then the court cannot take the expense out of the list. Conversely, the list is exhaustive. One can interpret the word incurred in r. Alternatively, the payment of that rent is treated as incurred as a necessary disbursement within rule 2. That takes me to Goldacre. This case raised some fundamental points as to when and how rent becomes an administration expense. The judge basically followed Re Toshoku and held that what Lord Hoffmann said about liquidation expenses applied to administration expenses.

I think he was right to do so and that this view will prevail. What now needs attention is not the fundamental point considered in Goldacre but the detailed application of the Lundy Granite principle. Incorporated under the Companies' Acts, to , whereby the liability of shareholders is limited.

The founders' shares have been subscribed for. Jand will be paid up in full. Further calls will be made only when profitable investments are offered, and are not to exceed 2s 6d per share each, or to be made within two months of any preceding call. Vincent- streel. This Company has been organised for the purpose of securingiconcessions anil acquiring land, gold, silver, and other properties, and of prospecting and develop- ing land and mining properties also to deal in shares of Corm rations and to promote companies.

The nrin- cipal fields of operation will be Mexico and South MexicJ, although presenting one of tbe richest in the world to an association foun ied on the pian of this Company, is at present almost unde- veloped.

Even in lis present dormant state it com- petes successfully with other countries its produc- tion of gold, silver, cupper, quicksiiver, and other valuable minerals. In addition to its extraordinary mineral wealth, Mexico possesses a tine climate, well adapted to European life, and a soil already producing with the poorest methods of culture and management an abundance of grain of various kinds, fruits, tobacco of great excellence, fibre, and timber. Horses, cattle, and other live stock ate reared in great numbers.

The mineral wealth of South Africa, just beginning to be appreciated, is in its infancy, and opportunities are now presented which, after another lew months, are not likely to occur again. The Directors have obtained the offer of a very fX. The Company has also secured ilie option to par- chase. This pro- perty, which is believed to be one of the very best that have ever Lo-i offered Oil the London market, is very extensive, embracing upwards of full mining claims.

It is proposed to divide it and form other companies for the purpose of working it. The Company has the offer of other valuable land and mining concessions, and contracts in Mexico and South Africa, and it is the intention of the Directors to investigate them more fully and secure some of the most valuable. Part of the funds of the Company will then be applied to the development of these pro- pertis with the object of forming subsidiary companies.

It is not intended to invest a larue sum of money i" a single undertaking, but to employ the funds in numerous enterprises, and as the Directors will in every case exercise tha greatest care in the selection of investments, this plaij wili, it is believed, ensure the safety of the Company's operations.

As Consulting Engineer in South Africa the Com- pauy has secured the services of Mr Edward Bates Dorsey, a gentleman who is recognized as an aullurity on mines and mining business in the Trunsvaal. Mr Dorscr, assisted by a corps of well-known and ex- perienced mining engineers, will carefully examine the propeties which are offered to the company.

It is, U intention of one of the Directors to proceed to IVU-ico and aiotlier to South Africa almost immediately, so that the Board will have, ill addition to professional assistance, the advice of two of their own number in the principal fields of operation.

Ir, will be seen that the scope of this Company embodies the features of a Trust Company, and although this principle will be more particularly applied to mining enterprises, it is believed that, while the investments will be safe. The Founders' Shares will receive no dividend in any year until the Ordinary Shares have received 20 per cent.

After paying 20 per cent. No promotion money has been or wiil be paid, nor has any contract been entered into by the Company- It is intended to make application to the Stock Exchange for a quotation of tue Company's shares. Where no allotment is made the deposit will be re- turned in full, and where the shares allotted are less than the number applied for, the balance of the de. Copies of the memorandum and articles of associa- tion of the Company can bj inspected at the office of the Company's solicitors.

Prospectuses and forms of application can be ob- tained from the bankers, soiiei tors, brokers, or auditors and it the offices of the Company. Moderate Jaw charges. No procuration fees. Easy repayments. La' ge shure ill Society's protits. Facility or redemption. The Offices, 28, St. Interest reduced half per cent. Incorporated Harrison, Abertillery; Newport and D'I. Higman, Swansea Pontypridd and Rhondda, Mr H.

Thomas, Aeron Villa, Rhymney. Illustrated Catalogues and terms for the Hfre System may be had on application, post free. Redeemable after the 1st October, , by yearly drawings of one tenth of the issue, at a premium of 5 percent. Interest payable half-yearly, on the lbth of April and the 15tb of October.

Messrs Wilks and Co. Messrs Stephen- -on. Mager and Co. Albion-street, King's- cross, N. Ludgate-bill, E. Broadway, Ludgate-hill, London, E. The well-known publishing, firm of Geoifce Routledge and Sons has lately been registered as a Limited Liability Company, in consequence of the death of Mr George ltoutledge, the founder ot the business.

The whole of the Share Canit-,I-viz. The net assets of the Firm on the 30th March, The property of the Company con- sists of the plant, copyrights, woodcuts, stereotypes, sists of the plant, copyrights, woodcuts, stereotypes, general stock-in-trade, book debts, and ail other assets of the business, excpt the premises in Broadway and Carter-lane E C. Manchester, and New York -the business was established in the year by F. Preference Sharesj. The books of the firm have for many years been regularly ami thoroughly audited, and the annual balance-sheet certified, by Messrs J.

Chad wick and Son, Chartered Accountants. Application for the Debentures should be m ade on the form annexed to the Prospectus, accomparded by a deposit of 5 per cent. The tinal instalment may be paid up at any time after Allotment, and interest at the rate of 5 per cent. Should no allotment be made, the deposit will be eturlled and if the amount allotted be le-s than that appbed for, the balance of the depostt wiil be credited towards the payment of subsequent instalments.

If any insta ment is not ftuiy paid, the amount previously paid "ill be liable to forfeiture. P Copies of the Articles of Association, and forms of the debentures, may be seen at the offices of the solicitors or the auditors of the Company, or at the Registered Offices, Broadway, Ludgate-hill. New Volume. Price 7d. Now Ready. By Li. Pitman, Illustrated by Paul Hardy. Author of Mistress June. Illustrated by W. S Stacey. Words and Music by J. B3ntly, Mus. By a Lady I1 ariner.

Munro, C. Chit-Chat on ""cini out, Paris aad London Correspondents. Cassell's Magazine. It is a perfect treasury of capital stories, beautiful engravings, exquisite poems, and charming music. It is a fainily magazine in the truest and best sense of the word. Published every Monday Morning. Price 21s per annum, or by post 2os.

A work designed to induce married people to limit their family within the means of subsistei. E,, on receipt of Eight Penny Stamps. Sent post free on receipt of Two Stamps. Address J. Very Agreeable to Take. Sold by ail Chemists and Druggists. Judge Brynmor Jones. Behold how good and joyful! TRIO, Protect us through the coming ni. Conductor Mr Jacob Davies.

Organist Mr S. Bedford-street, Cardiff. By order, J. Town Clerk. Town Hall, 28th November. All persons having land suitable for such purpose are requested to send particulars thereof to the Borough Engineer on or before the I5th December next.

Town-hall, Cardiff, 21st November, The subscription is limited to Gentlemen resident or having places of business in or near Newport, and being themselves natives of one of the two Western Counties, or the sons of such,and every one possessing the above qualifications is cordially invited. Heard, Esq.. Dock-street, or Loin the Hon Secretaries, at High-street, and 8?.

Newport, and must be applied for on or before the 28th inst. Admission, 6d. Ergal Jtotirts. Receiving Order madeth November, Date of Order for Summary Administration — 22nd November, Date and P;ace of First Meeting—7th December. Date of Public Examination—7th December. Address-H, Quay street. Part T. Pris Swllt. Thorough preparation for Cambridge, Oxford. Royal Academy of Music, and Trinity College examinations. Special attention is given to comfort, refinement, aiit physical well-being.

Terms moderate Fees from entrance. Healthy neighbourhood. Leading professors attend. Ambulance and other advanced classes for senior pupils. Two vacancies in January.

Matriculation Class. Archdeacon ot Liandaif. One Box or Horton's I. Pills are guaranteed to cure ail private cases and com- plications of the urinary organs, whether acquired or otherwise. Also Gravel and Pains in the Back. Free from Mercury. Post free for 4s fi om G.

Agents Cardiff—A. Hagon, Chemist, 39, Briuge-st. Chemist, Oxi'o. Newport—Youni, Chemist. Lmors a. I fiublic Amusements. S Gilbert. Dec, 9th, the Bohee Bros. Box plan at Thompson and Shackell's, Limited. Accompanist, Mis Clara N.

Davies cojiductor. NI r Paul Draper. Admission 3d. Doors open at 7. December 14th a Prize of One Guinea and a Hajf will be given to the three genliemen who will sing best any caich. The audience to adjudicate. Competitors will please send their names to Mr Herbert Mitchell. WsBURY ar. By Trains connecting with tbe. Service to and from Llanelly,.

Swansea, Neath, Bridgend, and other Stations, the time occupied between South Wales and the North is materially reduced. Through Carriages run trom Cardiff. The sheltered position of Langland Bay, with it4 southern aspect and balmy air, which entitle it to be called the Mentone of Wales, renders it a most desirable Winter Residence.

Strongly recomineuded by Members of the Medical Profession For tariff, carriages. QIlkt, Cleau, ami Comfortable. Charges moderate. Twoiniuutes' walk from Lime-street Station, and live minutes froinceiitral Staiiou. All wbo wish to preserve health should read this work.

KU 7TH. T0 be had 0f a'1 Newsagents. Among those whose storied will appear in this series are — B. Remember the Date and Pa. BER 21ST. To be had f all Newsagents.

Prepared by a new and :. Cameron, PresuUn' Roya'. Welsh Newspapers. Welsh Newspapers Search 15 million Welsh newspaper articles. Clear History. South Wales Daily News. Issue: 29th November Page: 1.

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