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In TST Millbank LLC and another v Resolution Real Estate Ltd (8 February 2018) (unreported), the legal and beneficial owners of the head-lease of commercial property (C) brought a claim against their tenant (D) for unpaid service, to which D counterclaimed. D failed to provide security for costs and so, in autumn 2017, judgment was entered for C on the counterclaim. Over the next few months D made a number of hopeless applications, including one to adjourn trial, due to start in early February. On 31 January 2018, two clear days before the start of the trial window, D served a copy of a notice of intention to appoint an administrator (NOI), the effect of which was to impose an interim moratorium pursuant to paragraph 44 of Schedule B1 to the Insolvency Act 1986 (Schedule B1). D waited until 5 February 2018, the first day of the window, to serve the NOI on the qualifying floating charge holder (a connected BVI company), thereby precluding an appointment within the trial window at all. On 5 February 2018, C filed an application for permission, pursuant to paragraphs 44((5) and 43(6)(b) of Schedule B1, to proceed with the trial notwithstanding the moratorium. The application came before Nugee J on 7 February 2018, who granted D’s request for a 24 hour adjournment, simultaneously arranging for trial to be listed to start on 12 February 2018. On the adjourned hearing, the application was granted.
The guidance offered in in Re Atlantic Computer Systems Plc was of limited assistance in a claim such as the present, but did show that the task for the court was to balance the interests of C and D (and especially its creditors). It would only be in exceptional cases that permission would be granted in respect of a purely monetary claim: Re Nortel Networks UK Ltd. However, the stage the underlying proceedings had reached was an important factor and the nearer they were to a conclusion the weightier that factor would be: South Court Construction Ltd v Iverson Road Ltd. Here, the matter was already within the trial window so that a more advanced stage could scarcely be envisaged and most of the costs of trial had already been incurred. There was some doubt as to whether, without any determination from the court at any point, C would be able to prove for the costs they had expended on getting the matter to trial. Moreover, even accepting D’s figures (called into question by C, though the judge did not feel able to resolve those issues), C were the most significant unsecured creditors. C also raised a number of issues, including the conduct of D in the preceding two months, from which they invited the court to infer that the NOI was part of a ploy to derail the trial and, as such, an abuse of process. Whilst accepting those concerns were reasonable, the judge felt unable to resolve them. In all the circumstances, however, it was appropriate to grant the permission sought.
This case raises two points of interest.
First, this is a rare and therefore significant example of a court granting permission to pursue a purely monetary claim subject to the statutory moratorium.
The second point of note was the judge’s acceptance that that C might encounter difficulties in proving for their costs without a court determination (either before or after the commencement of the insolvency). The point was not fully argued before the judge, but although unable to “decide this issue or even express a view”, he was prepared to accept that the risk was one he could take into account as a factor.
The point deserves further consideration.
“It is not a condition of the right to prove for a debt or liability which is contingent at the date when the company went into liquidation that the contingency should be bound to occur or that its occurrence should be determined by absolute rather than discretionary factors.”
This article was first published on Practical Law’s Dispute Resolution Blog.
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