[1] Sometimes this is known as 'moratorium'. Nothing turns on this.

[2] Gallagher v Hallows Associates (also known as Re Richard Clive Hallows (a firm no longer trading) [2021] BPIR 78; [2020] Lexis Citation 267 ('Gallagher') is a decision of a circuit judge in the County Court. As a result, Practice Direction (Citation of Authorities) [2001] 1 WLR 1001, CA ('Citation PD'), is relevant. In there Citation PD, there is paragraphs 6.1. and 6.2, which read:

'6.1 A judgment falling into one of the categories referred to in paragraph 6.2 below may not in future be cited before any court unless it clearly indicates that it purports to establish a new principle or to extend the present law. In respect of judgments delivered after the date of this Direction (April 9, 2001), that indication must take the form of an express statement to that effect. In respect of judgments delivered before the date of this Direction that indication must be present in or clearly deducible from the language used in the judgment.

6.2 Paragraph 6.1 applies to the following categories of judgment:

Applications attended by one party only.

Applications for permission to appeal.

Decisions on applications that only decide that the application is arguable.

County Court cases, unless

 (a) cited in order to illustrate the conventional measure of damages in a personal injury case; or

 (b) cited in a County Court in order to demonstrate current authority at that level on an issue in respect of which no decision at a higher level of authority is available.'

Gallagher is not a personal injury case. Further, there is a higher level of authority available, on the issue - namely Bristol & West Building Society v Trustee of the Property of John Julius Back (A Bankrupt) (also known as Re Melinek (A Bankrupt)) [1998] 1 BCLC 485 [1997] BPIR 358, a High Court decision.

Consequently, given Gallagher was decided after 9.4.01, Gallagher should not be referred to in any court, unless there is, within the judgment, an express statement to the effect that, it purports to establish a new principle or to extend the present law.

There is no such express statement in Gallagher.

By way of contrast, in Bank of Ireland v Colliers International UK Plc (In Administration) [2012] EWHC 2942 (Ch); [2013] 2 WLR 895, a decision of David Richards J, a different issue arose about paragraph 6 of the Practice Direction (Citation of Authorities) [2001] 1 WLR 1001. To make the position clear, David Richards J did make an express statement - see in paragraph 36:

'It was pointed out in Bank of Scotland plc (trading as Birmingham Midshires) v Breytenbach [2012] BPIR 1 that on a strict application of paragraph 6 of the Practice Direction (Citation of Authorities) [2001] 1 WLR 1001, In re Taylor should not be cited in court because it was a decision on an application attended by one party only. The application before me was not opposed by the administrators and was attended by one party only. None the less, in the light of the continuing uncertainty as to the availability of retrospective permission under the relevant provisions of the Insolvency Act 1986, I make clear for the purposes of the practice direction that this judgment is intended to resolve those uncertainties and to establish the principle that retrospective permission may be given.'

[3] For completeness, s.285 of the Insolvency Act 1986, entitled 'Restriction on proceedings and remedies', provides (in its entirety):

'(1) At any time when proceedings on a bankruptcy application are ongoing or proceedings on a bankruptcy petition are pending or an individual has been made bankrupt the court may stay any action, execution or other legal process against the property or person of the debtor or, as the case may be, of the bankrupt.

(2) Any court in which proceedings are pending against any individual may, on proof that a bankruptcy application has been made or a bankruptcy petition has been presented in respect of that individual or that he is an undischarged bankrupt, either stay the proceedings or allow them to continue on such terms as it thinks fit.

(3) After the making of a bankruptcy order no person who is a creditor of the bankrupt in respect of a debt provable in the bankruptcy shall-

(a) have any remedy against the property or person of the bankrupt in respect of that debt, or

(b) before the discharge of the bankrupt, commence any action or other legal proceedings against the bankrupt except with the leave of the court and on such terms as the court may impose.

This is subject to section 346 (enforcement procedures) and 347 (limited right to distress).

(4) Subject as follows, subsection (3) does not affect the right of a secured creditor of the bankrupt to enforce his security.

(5) Where any goods of an undischarged bankrupt are held by any person by way of pledge, pawn or other security, the official receiver may, after giving notice in writing of his intention to do so, inspect the goods. Where such a notice has been given to any person, that person is not entitled, without leave of the court, to realise his security unless he has given the trustee of the bankrupt's estate a reasonable opportunity of inspecting the goods and of exercising the bankrupt's right of redemption.

(6) References in this section to the property or goods of the bankrupt are to any of his property or goods, whether or not comprised in his estate.'

[4] There have been previous versions of s.285(3) of the Insolvency Act 1986 (in a form relating to (the now obsolete) bankruptcy receiving orders):

(1) Section 7 of the Bankruptcy Act 1914 was entitled 'Effect of receiving order' and, as originally enacted, read:

'On the making of a receiving order an official receiver shall be thereby constituted receiver of the property of the debtor, and thereafter, except as directed by this Act, no creditor to whom the debtor is indebted in respect of any debt provable in bankruptcy shall have any remedy against the property or person of the debtor in respect of the debt, or shall commence any action or other legal proceedings, unless with the leave of the court and on such terms as the court may impose.'

(2) Section 9 of the Bankruptcy Act 19883 was entitled 'Effect of receiving order' and, as originally enacted, read:

'On the making of a receiving order an official receiver shall be thereby constituted receiver of the property of the debtor, and thereafter, except as directed by this Act, no creditor to whom the debtor is indebted in respect of any debt provable in bankruptcy shall have any remedy against the property or person of the debtor in respect of the debt, or shall commence any action or other legal proceedings unless with the leave of the Court and on such terms as the Court may impose.'

[5] Section 285(3) ends with the proviso:

'This is subject to sections 346 (enforcement procedures) and 347 (limited right to distress)'

There two sections, from the Insolvency Act 1986, will be set out in full below. But, in the author's view:

(a) it is hard to see how s.346 can be relevant/applicable to s.285(3)(b). It seems relevant only to s.285(3)(a), which is not the topic of this article.

(b) s.347 relates only to a (general) situation where: (a) the undischarged bankrupt is a tenant; (b) there are rent arrears which accured before the commencement of the bankruptcy; (c) CRAR (the power of commercial rent arrears recovery under section 72(1) of the Tribunals, Courts and Enforcement Act 2007) power are exercised against goods and effect (or their proceeds of sale) comprised in the bankrupt estate. Readers who may fall into this situation, will need to read s.347 carefully.

Turning then to the two sections:

(1) Section 346 of the Insolvency Act 1986, entitled 'Enforcement procedures'

'(1) Subject to section 285 in Chapter II (restrictions on proceedings and remedies) and to the following provisions of this section, where the creditor of any person who is made bankrupt has, before the commencement of the bankruptcy

(a) issued execution against the goods or land of that person, or

(b) attached a debt due to that person from another person, that creditor is not entitled, as against the official receiver or trustee of the bankrupt’s estate, to retain the benefit of the execution or attachment, or any sums paid to avoid it, unless the execution or attachment was completed, or the sums were paid, before the commencement of the bankruptcy.

(1A) For the purposes of this section, Her Majesty’s Revenue and Customs is to be regarded as having attached a debt due to a person if it has taken action under Part 1 of Schedule 8 to the Finance (No. 2) Act 2015 (enforcement by deduction from accounts) as a result of which an amount standing to the credit of an account held by that person is(a) subject to arrangements made under paragraph 6(3) of that Schedule, or

(b) the subject of a deduction notice under paragraph 13 of that Schedule

(2) Subject as follows, where any goods of a person have been taken in execution, then, if before the completion of the execution notice is given to the enforcement officer or other officer charged with the execution that that person has been made bankrupt

(a) the enforcement officer or other officer shall on request deliver to the official receiver or trustee of the bankrupt’s estate the goods and any money seized or recovered in part satisfaction of the execution, but

(b) the costs of the execution are a first charge on the goods or money so delivered and the official receiver or trustee may sell the goods or a sufficient part of them for the purpose of satisfying the charge.

(3) Subject to subsection (6) below, where

(a) under an execution in respect of a judgment for a sum exceeding such sum as may be prescribed for the purposes of this subsection, the goods of any person are sold or money is paid in order to avoid a sale, and

(b) before the end of the period of 14 days beginning with the day of the sale or payment the enforcement officer or other officer charged with the execution is given notice that a bankruptcy application has been made or a bankruptcy petition has been presented in relation to that person, and

(c) a bankruptcy order is or has been made as a result of that application or on that petition,

the balance of the proceeds of sale or money paid, after deducting the costs of execution, shall (in priority to the claim of the execution creditor) be comprised in the bankrupt’s estate.

(4) Accordingly, in the case of an execution in respect of a judgment for a sum exceeding the sum prescribed for the purposes of subsection (3), the enforcement officer or other officer charged with the execution

(a) shall not dispose of the balance mentioned in subsection (3) at any time within the period of 14 days so mentioned or while proceedings on a bankruptcy application are ongoing or (as the case may be) there is pending a bankruptcy petition of which he has been given notice under that subsection, and

(b) shall pay that balance, where by virtue of that subsection it is comprised in the bankrupt’s estate, to the official receiver or (if there is one) to the trustee of that estate.

(5) For the purposes of this section

(a) an execution against goods is completed by seizure and sale or by the making of a charging order under section 1 of the Charging Orders Act 1979;

(b) an execution against land is completed by seizure, by the appointment of a receiver or by the making of a charging order under that section;

(c) an attachment of a debt is completed by the receipt of the debt.

(6) The rights conferred by subsections (1) to (3) on the official receiver or the trustee may, to such extent and on such terms as it thinks fit, be set aside by the court in favour of the creditor who has issued the execution or attached the debt.

(7) Nothing in this section entitles the trustee of a bankrupt’s estate to claim goods from a person who has acquired them in good faith under a sale by an enforcement officer or other officer charged with an execution.

(8) Neither subsection (2) nor subsection (3) applies in relation to any execution against property which has been acquired by or has devolved upon the bankrupt since the commencement of the bankruptcy, unless, at the time the execution is issued or before it is completed(a) the property has been or is claimed for the bankrupt’s estate under section 307 (after-acquired property), and

(b) a copy of the notice given under that section has been or is served on the enforcement officer or other officer charged with the execution.

(9) In this section “enforcement officer” means an individual who is authorised to act as an enforcement officer under the Courts Act 2003.'

(2) Section 347 of the Insolvency Act 1986, entitled 'Distress, etc.'

'(1) CRAR (the power of commercial rent arrears recovery under section 72(1) of the Tribunals, Courts and Enforcement Act 2007) is exercisable where the tenant is an undischarged bankrupt (subject to sections 252(2)(b) and 254(1) above and subsection (5) below) against goods and effects comprised in the bankrupt’s estate, but only for 6 months’ rent accrued due before the commencement of the bankruptcy.

(2) Where CRAR has been exercised to recover rent from an individual to whom a bankruptcy application or a bankruptcy petition relates and a bankruptcy order is subsequently made as a result of that application or on that petition, any amount recovered by way of CRAR which

(a) is in excess of the amount which by virtue of subsection (1) would have been recoverable after the commencement of the bankruptcy, or

(b) is in respect of rent for a period or part of a period after goods were taken control of under CRAR, shall be held for the bankrupt as part of his estate.

(3) Subsection (3A) applies where

(a) any person (whether or not a landlord or person entitled to rent) has distrained upon the goods or effects of an individual who is made bankrupt before the end of the period of 3 months beginning with the distraint, or

(b) Her Majesty’s Revenue and Customs has been paid any amount from an account of an individual under Part 1 of Schedule 8 to the Finance (No. 2) Act 2015 (enforcement by deduction from accounts) and the individual is made bankrupt before the end of the period of 3 months beginning with the payment.

(3A) Where this subsection applies

(a) in a case within subsection (3)(a), the goods or effects, or the proceeds of their sale, and

(b) in a case within subsection (3)(b), the amount in question, is charged for the benefit of the bankrupt’s estate with the preferential debts of the bankrupt to the extent that the bankrupt’s estate is for the time being insufficient for meeting them.

(4) Where by virtue of any charge under subsection (3A) any person surrenders any goods or effects to the trustee of a bankrupt’s estate or makes a payment to such a trustee, that person ranks, in respect of the amount of the proceeds of the sale of those goods or effects by the trustee or, as the case may be, the amount of the payment, as a preferential creditor of the bankrupt, except as against so much of the bankrupt’s estate as is available for the payment of preferential creditors by virtue of the surrender or payment.

(5) CRAR is not exercisable at any time after the discharge of a bankrupt against any goods or effects comprised in the bankrupt’s estate.

(6) [Repealed]

(7) [Repealed]

(8) Subject to sections 252(2)(b) and 254(1) above nothing in this Group of Parts affects any right to distrain otherwise than for rent; and any such right is at any time exercisable without restriction against property comprised in a bankrupt’s estate, even if that right is expressed by any enactment to be exercisable in like manner as a right to distrain for rent.

(9) Any right to distrain against property comprised in a bankrupt’s estate is exercisable notwithstanding that the property has vested in the trustee.

(10) The provisions of this section are without prejudice to a landlord’s right in a bankruptcy to prove for any bankruptcy debt in respect of rent.'

[5a] 'in rem' is latin. Its latin meaning is 'against a thing'. It means a security against a thing (strictly speaking, title to a thing) like a piece of land or property. The modern word would be 'real' - like in 'real property' - and a 'real security' over the land - but using the word 'real' can cause confusion, as to whether 'real' is meant in that sense, or in the sense of real/imaginary.

At this level, there are two types of security: (1) real (i.e. in rem) security; and (2) personal security.

If the debt, due from the undischarged bankrupt to the creditor, is secured, by a personal security, given by a third person (so a typical creditor / principal debtor / guarantor tripartite situation) - the creditor's rights against the guarantor, on that personal security, will be unaffected by s.285 of the Insolvency Act 1986.

[6] Section 285(4) provides:

'Subject as follows, subsection (3) does not affect the right of a secured creditor of the bankrupt to enforce his security.'

What follows is subsections 285(4) and 285(6), which read as follows:

'(5) Where any goods of an undischarged bankrupt are held by any person by way of pledge, pawn or other security, the official receiver may, after giving notice in writing of his intention to do so, inspect the goods.

Where such a notice has been given to any person, that person is not entitled, without leave of the court, to realise his security unless he has given the trustee of the bankrupt’s estate a reasonable opportunity of inspecting the goods and of exercising the bankrupt’s right of redemption.

(6) References in this section to the property or goods of the bankrupt are to any of his property or goods, whether or not comprised in his estate.'

[6a] In Gardner v Lemma Europe Insurance Company Limited (In Liquidation) [2016] EWCA Civ 484 ('Gardner v Lemma'), the Court of Appeal (Patten LJ; Kitchin LJ; Floyd LJ) heard an appeal against HHJ David Cooke's (sitting as a Judge of the High Court) decision at first instance [2014] EWHC 3674 (Ch) on effect of a provision analogous to, 130(2) of the Insolvency Act 1986, but in respect to foreign companies (recognised) liquidations, which in turn is analogous to s.285 of the Insolvency Act 1986, and said 'The judge set out the relevant principles in [7] – [11] of his judgment and [counsel for the appellant) accepts that these contain an accurate statement of the law.' (paragraph 3) and later, '...we have reached the conclusion that the appeal should be dismissed essentially for the reasons given by the judge for dismissing [the appellant's] application: see [2014] EWHC 3674 (Ch)' (paragraph 4). HHJ Cooke had said, at paragraphs 10 and 11:

'...it is said that the court should recognise the fact that liquidation or insolvency proceedings are proceedings in which the collective interests of the creditors are to be established and that they are conducted in such a way which should enable claims against the company to be resolved with the least possible cost for the insolvent estate since such costs will affect adversely the interests of all the creditors. With that in mind, the court should be wary of imposing on liquidators the potential heavy costs of litigation in outside proceedings where the claim could be more cheaply, conveniently or speedily resolved within the liquidation process. Those points were emphasised by Proudman J in Bourne v Charit-Email Technology Partnership.

The last principle, it seems to me, may well indicate that in circumstances where a creditor has advanced a claim which requires a quantification or evaluation, in many cases it would be appropriate to allow the liquidator to consider the claim first and to make his own decision on that claim by way of assessing and either accepting or rejecting the proof. If the creditor were to wish to go straight to outside proceedings, unless he could demonstrate that there was some advantage of fairness or expediency in doing so, he might well face a difficult task in persuading the court that the additional costs of that should be incurred before the liquidator had the opportunity to make his own decision.'

Later, Patten LJ in Gardner v Lemma spoke of '...a stay of proceedings against the company in order to protect the interests of creditors.' (paragraph 15)

[6b] Two points here:

(1) Smith (a bankrupt) v Braintree DC [1990] 2 AC 215 ('Smith') is an example of the bankrupt court making an order, staying proceedings in another court. On the facts in Smith, a county court registrar made an order under section 285(1) of the Insolvency Act 1986, that the proceedings in the Magistrates' Court for the committal of the debtor, be stayed. The House of Lords held that the county court registrar had had the power, by section 285(1), to do this.

(2) In Gardner v Lemma Europe Insurance Company Limited (In Liquidation) [2016] EWCA Civ 484 ('Gardner v Lemma'), the Court of Appeal (Patten LJ; Kitchin LJ; Floyd LJ) considering the effect of a provision analogous to, 130(2) of the Insolvency Act 1986, but in respect to foreign companies in liquidation, where the liquidation is recognied by the English Court (paragraph 1). Patten LJ said, paragraphs 2 to 4:

'The imposition of an automatic stay is designed to avoid the unnecessary expenditure of assets otherwise available for distribution amongst creditors and to support the replacement of a creditor's right to establish a claim by judgment in an action with a right to lodge a proof of debt. This process is inherently less expensive and carries with it a right of access to the Companies Court in the event that the proof is rejected: see Rule 4.83 of the IR 1986. Consistently with this, leave to commence proceedings will only be granted by the court when it is right and fair to do so in all the circumstances and is unlikely to be granted where the issue in the action could be dealt with as conveniently in the liquidation as in other proceedings: see Re Exchange Securities & Commodities Limited [1983] BCLC 186 at 196.

The judge set out the relevant principles in [7] – [11] of his judgment and [counsel for the appellant] accepts that these contain an accurate statement of the law. In particular, he accepts that if the claim which the creditor wishes to make does not pass the threshold of genuine arguability then the application is almost bound to be dismissed. But if that threshold is crossed then the court's function is to determine whether it is fair and just to allow it to be made in some form of proceedings rather than in the liquidation. The further determination of the merits of the claim will be a matter for the forum in which the creditor's claim is allowed to proceed.

I propose to give a short judgment in this case because we have reached the conclusion that the appeal should be dismissed essentially for the reasons given by the judge for dismissing Mr Gardner's application: see [2014] EWHC 3674 (Ch).'

In Gardner v Lemma Europe Insurance Company Limited (In Liquidation) [2014] EWHC 3674 (Ch), in the High Court, His Honour Judge David Cooke (sitting as a Judge of the High Court) said, at paragraphs 6 to 11:

'The court has power to lift the stay or vary the terms of the stay. It is common ground before me that the effect of that jurisdiction and the way it is to be exercised is very similar to that which would apply if the stay on proceedings had arisen in relation to a liquidation in this country pursuant to section 130 of the Insolvency Act 1986.

I was referred to a number of authorities, but there was no significant disagreement between parties as to the effect of the law as set out in those authorities. The most recent one is the decision of Mr. Nicholas Strauss Q.C. in Fennell v Halliwells LLP, but the principles that he expresses there have been summarised in very similar form in many of the earlier cases. Relevantly, the overall discretion which is given by the court is described as a broad discretion to do what is right and fair in the circumstances of the individual case. That phraseology was used in Re Aro Co Limited in a passage that has been quoted in many subsequent cases. The approach is the same in cases subject only to the local jurisdiction of the UK as it is to those involving cross-border issues.

That was the basis on which Briggs J dealt with Cosco Bulk Carrier Co Ltd v Armada Shipping SA. There are some points of guidance which have been referred to in the cases which assist in the direction in which the broad discretion should be pursued. Firstly, it is accepted that if the applicant cannot show a genuinely arguable case to be pursued in the proceedings which he proposes then permission should be refused. That would be obvious although I have not been referred to an authority setting out the standard to be applied in determining whether there is a genuinely arguable case. It seems to me that the principle is very similar and the test to be applied should be similar to that which the court uses in determining applications for summary judgment or for striking out a case.

If the case would pass that threshold of genuine arguability, the court should not engage thereafter in an investigation of the merits of the proposed claim because those are to be determined in whatever procedure the court determines is most appropriate, either within the liquidation or outside it. The question, therefore, is whether in all the circumstances of the case it is more appropriate, fair or just that those issues should be determined within the procedure of the liquidation itself or by other proceedings, whether they are before a court or an arbitrator.

Next, it is said that the court should recognise the fact that liquidation or insolvency proceedings are proceedings in which the collective interests of the creditors are to be established and that they are conducted in such a way which should enable claims against the company to be resolved with the least possible cost for the insolvent estate since such costs will affect adversely the interests of all the creditors. With that in mind, the court should be wary of imposing on liquidators the potential heavy costs of litigation in outside proceedings where the claim could be more cheaply, conveniently or speedily resolved within the liquidation process. Those points were emphasised by Proudman J in Bourne v Charit-Email Technology Partnership.

The last principle, it seems to me, may well indicate that in circumstances where a creditor has advanced a claim which requires a quantification or evaluation, in many cases it would be appropriate to allow the liquidator to consider the claim first and to make his own decision on that claim by way of assessing and either accepting or rejecting the proof. If the creditor were to wish to go straight to outside proceedings, unless he could demonstrate that there was some advantage of fairness or expediency in doing so, he might well face a difficult task in persuading the court that the additional costs of that should be incurred before the liquidator had the opportunity to make his own decision.'

[7] In Carr v British International Helicopters Ltd [1994] ICR 18, a company was made subject an administration order (12.12.91) (paragraph 1). Subsequenty, some workers were made redundant, including the Appellant (paragraph 2). The appellant lodged an application in the Industrial Tribunal (now the Employment Tribunal)(17.10.92), the only remedy sought was reinstatement (paragraph 3). The company contended that the Industrial Tribunal was incompetent, bcause the Appellant had not obtained either the consent of the administrators or leave of the court, as required by s.11 of the Insolvency Act 1986, before raising the application (paragraph 3). Section 11(3)(d) of the 1986 Act was the relevant part - that part read:

'During the period for which an administration order is in force-

...

(d) no other proceedings and no execution or other legal process may be commenced or continued, and no distress may be levied, against the company or its property except with the consent of the administrator or the leave of the court and subject (where the court gives leave) to such terms as aforesaid.'

The question was: '...whether a complaint to an industrial tribunal, on the ground of unfair selection for redundancy, falls under the description of “other proceedings”, within the meaning of sec. 11(3)(d) of the 1986 Act.' (paragraph 7)

Lord Coulsfield said, at paragraphs 32 to 33:

'...we regard it as open to us to construe sec. 11 of the 1986 Act for ourselves. In our view, the purposes of the insolvency legislation can quite well be served without requiring that a summons served, or an application made, without prior consent, should be considered to be a nullity or incompetent. The purpose of the legislation is, in general terms, to prevent the liquidator's or administrator's task being made more difficult, by a scramble among creditors to raise actions, obtain decrees or attach assets. We cannot, however, see that there is any reason why it should be necessary for the provision of such protection to treat any proceedings which may, for one reason or another, be commenced without consent as null, and, therefore, incapable of proceeding further. In the particular case of the application of sec. 11 to employment protection proceedings, it seems to us that there are manifest practical advantages in treating applications made without consent as not being nullities. As we have already observed, industrial tribunal proceedings are designed to be quick and simple, and it is part of that design that the procedure should be accessible to an individual, without legal or, indeed, other representation. We do not think that, in the ordinary case, an individual affected by unfair dismissal or redundancy is likely to be aware of the provisions of sec. 11, or of the requirement of consent. It seems to us that it would be unduly burdensome, and unduly restrictive of the statutory right to complain to an industrial tribunal, to require such an individual to reapply after obtaining an appropriate consent: indeed, it would be burdensome to require such an individual to keep in touch with the process of administration and discover when his application may be presented.

Further, it seems to us to be likely that it will only be in rare cases that it will be appropriate for consent to be refused to the bringing of proceedings for unfair dismissal, or in respect of redundancy. The guidelines set out by the Court of Appeal in Re Atlantic Computer Systems plc [1990] BCC 859; [1992] Ch 505 stress that the purpose of the prohibition in sec. 11 is to enable the company to achieve the object for which the order was made, and the purpose of the power to give leave is to enable the court to relax the prohibition where it would be inequitable for the prohibition to apply, and that the court has to balance the interests of the parties concerned. However, the employment protection legislation is designed, in the main, for the protection of employees. One of the principal objects of the legislation is to secure the speedy presentation and disposal of employees' claims, and it is very hard to see that, in the ordinary case, it is likely to be really prejudicial to the administration of the company that such matters should be so dealt with. That is perhaps particularly so in a case such as this, where the employee worked for the administrator for a substantial period after the administration order was made, and the administrator might well be regarded as having adopted his contract of employment. In the whole circumstances, therefore, we consider that the industrial tribunal were wrong in holding that the present application was a nullity, and that the appropriate course would have been to sist the application in order to allow the applicant an opportunity to apply for consent for the proceedings to be brought, should the administrator persist in taking the point.'

[8] Two points to note here:

(1) Williamson v Bishop of London [2022] EAT 118; [2022] ICR 1670 ('Williamson'), Eady J (President) in the Employment Appeal Tribunal on 1.8.22 (appeal in Court of Appeal (Baker LJ; Simler LJ; Popplewell LJ) dismissed on 5.4.23) was a case about whether proceedings commenced without first obtaining court leave/permission, was irregular, or a nullity - where the proceedings were contrary to a Civil Proceeding Orders under section 42(1) of the Senior Courts Act 1981. In his analysis, Eady J sought to distinguish the situation before him, from that where proceedings are commenced without leave/permission of the Court, contrary to the general prohibition in s.285(3) of the Insolvency Act 1986. In distinguished the case, he referred to the context of s.285. Eady J said, at paragraph 69:

'69. In particular, I do not consider the claimant to be assisted by his reliance on case law under the Insolvency Act 1986. In that context, the case of In re Saunders [1997] Ch 60 illustrates the obvious points of distinction.

69.1 First, those bringing the proceedings against the bankrupt might not know of the bankruptcy (as was the position in Saunders itself). An obvious injustice would arise if proceedings brought by a creditor in that position were subsequently to be ruled to be a nullity. That, of course, is very different to the case of an individual who is subject to a CPO (of which they will be aware) who then chooses to commence proceedings without obtaining the required consent of the High Court (something of which they will, again, have full knowledge).

69.2 Secondly, the purpose of the protection in the insolvency context is to prevent the task of the administrator being made more difficult “by a scramble among creditors to raise actions, obtain degrees or attach assets” (per Lord Coulsfield in Carr v British International Helicopters Ltd [1994] ICR 18 (cited by Lindsay J in Saunders)); that purpose could still be served without requiring that proceedings commenced without the necessary permission should be treated as a nullity (again, the point made in Carr v British International Helicopters). That is very different to the purpose of the protection provided by section 42 of the SCA.'

(2) In Williamson v Bishop of London [2023] EWCA Civ 379; [2023] 1 WLR 2472 ('Williamson COA'), Simler LJ in the Court of Appeal (with whom Baker LJ and Popplewell LJ agreed) on 5.4.23, said at paragraph 48:

'Dealing with the insolvency context first, the purpose of section 285 of the Insolvency Act 1985 is to prevent the liquidator or administrator's task being made difficult “by a scramble among creditors to raise actions, obtain decrees or attach assets” (see Lord Coulsfield in Carr v British International Helicopters Ltd [1994] ICR 18, cited by Lindsay J in In re Saunders (A Bankrupt) [1997] Ch 60, 79).'

It is right to note that:

(a) s.285 of the Insolvency Act 1985 (note 1985 not 1986) does not exist/has never existed. The last main section in the 1985 Act (now obsolete) is s.236. It is clear that what was meant was s.285 of the Insolvency Act 1986; but

(b) strictly speaking, s.285 of the Insolvency Act 1986 applies to only to trustee in bankruptcy. It does not apply to other forms of insolvency roles - including liquidators or administrators.

In the author's view, the words 'liquidator or administrator's' - should be read as 'trustee in bankuptcy'.

[9] Note, the landlords' powers of peaceable re-entry are not characterised as a kind of security for s.383(2) of the Insolvency Act 1986 ('1986 Act') - but the exercise of those powers, are not inhibited by s.285 of the 1986 Act. In Razzaq v Pala [1998] BCC 66 ('Razzaq'), Lightman J said, under the heading 'Law':

'1. Validity of peaceable re-entry

Section 285 of the Insolvency Act 1986, so far as material, provides:

"(3) After the making of a bankruptcy order no person who is a creditor of the bankrupt in respect of a debt provable in the bankruptcy shall—(a) have any remedy against the property or person of the bankrupt in respect of that debt, or (b) before the discharge of the bankrupt, commence any action or other legal proceedings against the bankrupt except with the leave of the court and on such terms as the court may impose. This is subject to sections 346 (enforcement procedures) and 347 (limited right to distress). (4) Subject as follows, subsection (3) does not affect the right of a secured creditor of the bankrupt to enforce his security."

The principal issues of law raised in this case are twofold. The first is whether the exercise of the right of peaceable re-entry by a landlord when the tenant is in arrears with his rent constitutes the enforcement by a secured creditor of his security. If this is so, section 285(3) has no application. The second (which only arises if the answer to the first issue is in the negative) is whether the right of peaceable re-entry constitutes a remedy against the property or person of the bankrupt in respect of the rent due to the landlord and accordingly is forbidden save with the prior leave of the court. It is common ground that the exercise of the right of re-entry does not constitute the commencement of legal proceedings within section 285(3)(b) and that no leave was sought or obtained before the reentry was made.

The words " security" and " remedy" are each used in two different senses, the one according with the recognised legal meaning of the words, and the other a wider and more colloquial sense. The question is the sense in which they are used in the section.'

Later, Lightman J in Razzaq, at 1342G to 1343B, said:

'...it is now quite clear to me that the answer to the question is in the negative and that for the purposes of section 383(2) the landlord's right of re-entry does not constitute a security. The scheme of the Act confirms that the word " security" is used in its strict legal sense. Section 269(1) provides that a fully secured creditor can only petition for the bankruptcy of the debtor to the extent that he is a unsecured creditor: a secured creditor can only petition if he says that he is willing at least in part to give up his security. The combined effect of section 383(2) and rules 6.109 and 6.115 of'the Insolvency Rules 1986 (S.I. 1986 No. 1925) is that a secured creditor must put a value on his security and prove only for the balance.

The language of these sections is quite inappropriate to the inclusion of a right of re-entry as a security. There can be no question of a landlord being required to surrender his right of re-entry if he is to petition or prove in a bankruptcy; yet he would have to do so if his right of re-entry constituted for the purposes of personal bankruptcy a security. Nor can his right of re-entry sensibly be valued. These considerations confirm that the term "security" is not to be extended to include the right of re-entry. A landlord can only be a secured creditor if he has taken security, e.g. a charge on the lease or subrentals.'

For completeness, after holding that the right of re-entry was not a security, Lightman J, determined whether the right of re-entry was a 'remedy' for the purposes of s.285(3(a) of the 1986 Act. Under the subheading 'Right of re-entry as remedy', Lightman J said, at 1343E:

'The right of re-entry is often colloquially referred to as a remedy of the landlord: see, e.g., In re A Debtor (No. 13A-IO-1995) [1995] 1 W.L.R. 1127, 1133. But the Court of Appeal in Ezekiel v. Orakpo [1977] Q.B. 260 held, with reference to a provision to like effect, in section 7(1) of the Bankruptcy Act 1914, that the right of re-entry, whether exercised by service of a writ claiming possession or by peaceable entry, does not constitute a remedy against the property or person of the bankrupt. The reasoning is that the exercise of the right of forfeiture does not remedy any preceding breach of covenant: it merely prevents its recurrence and affords relief to the landlord from being saddled with a defaulting tenant. If this is so, it is anomalous that under section 285(3) a landlord requires the leave of the court before he can commence proceedings for forfeiture, but is immune from any restraint on exercising his right of peaceable reentry. This is the more so when regard is had to the disfavour with which the law looks upon peaceable re-entry: see Billson v. Residential Apartments Ltd. [1992] 1 A.C. 494, 536E. But that is not a sufficient basis on which I am free to give the word "remedy" a wider meaning than afforded in Ezekiel v. Orakpo [1977] Q.B. 260.'

[9a] In Azuonye v Kent [2019] EWCA Civ 1289; [2019] 4 WLR 101; [2019] BPIR 1317 ('Azuonye'), Court of Appeal (Floyd LJ, Simon LJ, David Richards LJ) on 19.7.19, David Richards LJ gave a broad overview of bankruptcy law - paragraphs 7 onwards; which, intermixed, are some observations about proveable debts - (paragraphs 10 onwards).

Turning then, to that David Richards LJ in Azuonye, said:

'7...I will mention some basic features of bankruptcy which provide the relevant background.

8 In the very broadest of terms, the purpose of bankruptcy is to provide protection to the bankrupt against the claims of creditors in respect of debts and liabilities as at the commencement of the bankruptcy and to realise the property owned by the bankrupt as at that date and distribute the realised proceeds among those creditors.

9 On the appointment of a trustee in bankruptcy, the bankrupt’s estate vests in the trustee: section 306 of the Act. The bankrupt’s estate is defined by section 283 to comprise all property belonging to or vested in the bankrupt at the commencement of the bankruptcy, subject to certain exceptions and additions not relevant to the present case. A bankruptcy commences on the making of the bankruptcy order: section 278. After the making of a bankruptcy order, no creditor of the bankrupt has, in respect of a debt provable in the bankruptcy, any remedy against the person or property of the bankrupt and may not commence proceedings against the bankrupt in respect of the debt save with the leave of the court: section 285(3).

10 “Bankruptcy debt” is defined by section 382(1) to include “any debt or liability to which [the bankrupt] is subject at the commencement of the bankruptcy” and “any debt or liability to which he may become subject after the commencement of the bankruptcy (including after his discharge from bankruptcy) by reason of any obligation incurred before the commencement of the bankruptcy”. It is immaterial whether “the debt or liability is present or future, whether it is certain or contingent or whether its amount is fixed or liquidated, or is capable of being ascertained by fixed rules or as a maer of opinion”: section 382(3). “Liability” is defined as “a liability to pay money or money’s worth, including any liability under an enactment, any liability for breach of trust, any liability in contract, tort or bailment and any liability arising out of an obligation to make restitution”: section 382(4). The breadth of these provisions is reflected in the definition of “provable debts” in rule 14.2(1) of the Insolvency (England and Wales) Rules 2016: “All claims by creditors except as provided by this rule are provable as debts against the company or bankrupt, whether they are present or future, certain or contingent, ascertained or sounding only in damages”.

11 The very broad reach of the definition of provable debts was emphasised by the Supreme Court in In re Nortel GmbH [2013] UKSC 52; [2014] AC 209. Lord Neuberger at para 92 quoted the Report of the Review Commiee on Insolvency Law and Practice (1982) (the Cork report) which at para 1289 stated that it was a

“basic principle of the law of insolvency that every debt or liability capable of being expressed in money terms should be eligible for proof … so that the insolvency administration should deal comprehensively with, and in one way or another discharge, all such debts and liabilities.”

Lord Neuberger continued at para 93:

“The notion that all possible liabilities within reason should be provable helps achieve equal justice to all creditors and potential creditors in any insolvency, and, in bankruptcy proceedings, helps ensure that the former bankrupt can in due course start afresh.”

12 This approach informed the decision of the Supreme Court that the possible exposure of a company in administration to the future imposition of a liability to contribute to a pension scheme fund by the service of a contribution notice by the Pensions Regulator pursuant to statutory powers was a provable debt. This was so, notwithstanding that the decision to serve a contribution notice and the amount of the liability imposed by it were both decisions to be taken by the Regulator in the exercise of discretionary powers. In reaching this decision, the Supreme Court overruled the decision of this court in Glenister v Rowe [2000] Ch 76; [1999] 3 WLR 716 that a claim for costs in litigation against a bankrupt incurred before the bankruptcy, but not the subject of an order by the court before the bankruptcy, was not a provable debt because no liability to pay such costs arose until the court exercised its discretionary power to make an order for costs.

13 Some very limited exceptions to the broad category of provable debts are made in the legislation on policy grounds. Specific exceptions are set out in rule 14.2(2). In addition, rule 14.2(5) provides that: “Nothing in this rule prejudices any enactment or rule of law under which a particular kind of debt is not provable, whether on grounds of public policy or otherwise”. As will be seen, the respondent places reliance on this sub-rule.

14 A bankruptcy order prevents the enforcement of any provable debt (section 285(3)), and effectively limits any means of recovery of such a debt to proof in the bankruptcy, but the bankrupt is not released from the provable debts, or any other bankruptcy debts, until discharge under sections 279–280 of the Act. Normally... a bankrupt is discharged after one year. Section 281(1) provides that the discharge releases the bankrupt from all bankruptcy debts, but it does not affect creditors’ rights of proof. There are some specific bankruptcy debts, including some provable debts, which are not released by the bankrupt’s discharge ...

15 Because income accrued after the commencement of bankruptcy does not form part of the bankrupt’s estate, not being the bankrupt’s property at the commencement of the bankruptcy, section 310, as amended by section 259 of the Enterprise Act 2002, makes provision for the making of IPOs. It is defined as “an order claiming for the bankrupt’s estate so much of the income of the bankrupt during the period for which the order is in force as may be specified in the order”: section 310(1). An IPO can only be made on the application of the trustee and before the discharge of the bankrupt. The period of the order may end after the discharge of the bankrupt, but the period may not exceed three years from the making of the order: section 310(6). An IPO may require either the bankrupt to make the payments or require a person, such as an employer, to make the payments to the trustee, instead of to the bankrupt: section 310(3). Sums received by the trustee under an IPO form part of the bankrupt’s estate: section 310(5). An IPO may be varied on the application of the trustee or the bankrupt, whether before or after discharge: section 310(6A).'

In Azuonye, the bankrupt had been made bankrupt (1st bankruptcy), made subject to an income payment order (IPO) and, after the bankrupt was discharged from the 1st Bankruptcy, but before the IPO ended, the bankrupt was made bankruptcy a second time (2nd bankruptcy). The issue for the Court was, what does that mean for the IPO?

David Richards LJ framed the issue, in paragraph 16, as follows:

'The problem arises in the present case because the [bankrupt] was made bankrupt for a second time, before the expiry of the IPO made in the first bankruptcy. The issue is whether the IPO none the less continues in force and continues to be enforceable for the benefit of the estate in the first bankruptcy, as the [Trustee in Bankruptcy] submits and the courts below have held, or whether the claim for payments falling due after commencement of the second bankruptcy is a provable debt in the second bankruptcy, as the [bankrupt] submits.'

Note the legal position is clear if one fact is changed - namely that the 2nd bankruptcy order is made before the bankrupt is discharged from the 1st Bankruptcy (i.e. while has an undischarged bankrupt). Where this is the scenario, sections 334-335 of the Insolvency Act 1986 make provision for this eventuality (paragraph 17). But,

'There is no equivalent to section 335 addressing the position as regards an IPO if a later bankruptcy commences after the debtor has been discharged from the earlier bankruptcy.' (paragraph 19)

Returning to the defining the issue in Azuonye. This had, at times, had been framed as whether the bankrupt's obligation to pay money pursuant to the IPO in future, was a debt, which was proveable as a debt in the second bankruptcy? It is important to note the 'in future' because, David Richards J recorded that:

'The [Trustee in Bankruptcy] accepts, and it is common ground, that arrears due under the IPO at the commencement of the appellant’s second bankruptcy are provable in the second bankruptcy and cannot be recovered by other means. This is the effect of a decision of Judge Hodge QC, sitting in the High Court, in Booth v Mond [2010] EWHC 1576 (Ch); [2010] BPIR 1111 and it is not suggested that the decision was wrong. In my view, Judge Hodge QC was clearly right.' [bold added]

[10] See Azuonye v Kent [2019] EWCA Civ 1289; [2019] 4 WLR 101; [2019] BPIR 1317, Court of Appeal (Floyd LJ, Simon LJ, David Richards LJ) on 19.7.19.

[11] In the following English statutes/statutory instruments, the phrase 'action or other legal proceedings' appears:

(1) s.251G of the Insolvency Act 1986, entitled 'Moratorium from qualifying debts'. Section 251G(2) provides:

'During the moratorium, the creditor to whom a specified qualifying debt is owed(a) has no remedy in respect of the debt, and

(b) may not—

(i) commence a creditor’s petition in respect of the debt, or

(ii) otherwise commence any action or other legal proceedings against the debtor for the debt, except with the permission of the court and on such terms as the court may impose.' [bold added]

(2) Insolvency Act 1986, Schedule 1 entitled 'Powers of administrator or administrative receiver', paragraph 5:

'Power to bring or defend any action or other legal proceedings in the name and on behalf of the company.' [bold added]

(3) Friendly Societies Act 1974, s.103, entitled 'Legal proceedings concerning registered societies, etc' contains, in sectino 103(1):

'The trustees of a registered society or branch, or any officers authorised by the rules thereof, may bring or defend, or cause to be brought or defended, any action or other legal proceedings in any court whatsoever, touching or concerning any property, right or claim of the society or branch, and may sue and be sued in their proper names, without any other description than the title of their office.' [bold added]

(4) Foreign Enlistment Act 1870, s.29, entitled 'Indemnity to Secretary of State or chief executive authority', wherein it provides:

'The Secretary of State shall not, nor shall the chief executive authority, be responsible in any action or other legal proceedings whatsoever for any warrant issued by him in pursuance of this Act, or be examinable as a witness, except at his own request, in any court of justice in respect of the circumstances which led to the issue of the warrant.' [bold added]

(5) Tees Conservancy Superannuation Scheme Act 1953, s.30 (as originally drafted), entitled 'Actuarial investigation under Act of 1907', wherein, s.30(2) provides:

'No action or other legal proceedings whatsoever shall be instituted in any court of law because of the default of the Commissioners in not complying on or after the thirty-first day of October nineteen hundred and fifty-two with subsection (3) of the said section 21 of the Act of 1907 or for or on account of any matter arising directly or indirectly from that default.' [bold added]

(6) Trading with the Enemy (Amendment) Act 1918, s.7 (as originally drafted), entitled 'Claims against businesses or companies being wound up', wherein s.7(2) provides:

'Where any such order has been made any action or other legal proceedings against the person, firm, or company whose business is being wound up, or, as the case may be, against the company which is being wound up, may, on the application of the controller or liquidator, be stayed by the court in which the proceedings are pending.' [bold added]

(7) Bankruptcy Act 1914, s.7 (as originally drafted), entitled 'Effect of receiving order', wherein s.7(1) provides:

'On the making of a receiving order an official receiver shall be thereby constituted receiver of the property of the debtor, and thereafter, except as directed by this Act, no creditor to whom the debtor is indebted in respect of any debt provable in bankruptcy shall have any remedy against the property or person of the debtor in respect of the debt, or shall commence any action or other legal proceedings, unless with the leave of the court and on such terms as the court may impose.' [bold added]

Bankruptcy Act 1883, s.52 (as originally drafted), entitled 'Effect of receiving order', the immediate predecessor statutory provision, provided the same:

'On the making of a receiving order an official receiver shall be thereby constituted receiver of the property of the debtor, and thereafter, except as directed by this Act, no creditor to whom the debtor is indebted in respect of any debt provable in bankruptcy shall have any remedy against the property or person of the debtor in respect of the debt, or shall commence any action or other legal proceedings unless with the leave of the Court and on such terms as the Court may impose.' [bold added]

(8) Cinematograph Films (Distribution of Levy) Regulations 1970/1146, reg. 11 (as originally drafted), entitled 'Notice of rejection of claims' contained reg.11(3) to (5), which read:

'(3) A notice of the rejection of a claim (which has not been withdrawn as aforesaid) shall be final and conclusive as to the ground of the rejection unless—

(a) before the expiry of one month from the giving of the notice an action or other legal proceedings have been commenced with a view to disputing the rejection of the claim to which the notice relates, and the commencement thereof has been notified in writing to the Agency by the maker of the film before the expiry of the said one month; or

(b) where the ground of the rejection is that the film is not an eligible film, any other action or other legal proceedings (whether or not the Agency are a party thereto), which might affect the question as to whether the film is or is not an eligible film, have been commenced before the expiry of the said one month and were not concluded at the date on which the notice was given, and the commencement thereof has been notified in writing to the Agency by the maker of the film before the expiry of the said one month.

(4) If any action or other legal proceedings mentioned in paragraph (3)(6) have been commenced and were not concluded as aforesaid, the Agency shall, at the conclusion thereof or of the last of them, give to the maker of the film in question a notice in writing stating whether they accept or reject the claim in respect of that film; and, where the claim is rejected, the provisions of paragraphs (2), (3) (with the omission of head (b)) and (5) of this Regulation shall apply to the notice of rejection as they apply to a notice of rejection given under paragraph (1) hereof.

(5) Where any action or other legal proceedings mentioned in paragraph (3) are abandoned, that paragraph shall have effect as if they had never been commenced.' [bold added]

(9) Cinematograph Films (Distribution of Levy) Regulations 1970/1146, reg. 12 (as originally drafted), entitled 'Notice of determination of earnings' contained reg.12(3) to (6), which read:

'(3) A notice of the determination of the earnings of an eligible film, or where that notice has been amended, the notice as amended, shall be final and conclusive as to the earnings of that film for the purposes of these Regulations unless—

(a) before the expiry of one month from the giving of the notice, or, where the notice has been amended, from the giving of the notice last amending it, an action or other legal proceedings have been commenced with a view to disputing the determination to which the notice relates, and the commencement thereof has been notified in writing to the Agency by the maker of the film before the expiry of the said one month; or

(b) any other action or other legal proceedings (whether or not the Agency are a party thereto), which might affect the earnings of the film, have been commenced before the expiry of the said one month and were not concluded at the date on which the notice was given, and the commencement thereof has been notified in writing to the Agency by the maker of the film before the expiry of the said one month.

(4) If any action or other legal proceedings have been commenced for the purpose mentioned in paragraph (3)(a) hereof, at the conclusion thereof the Agency shall, if, and to the extent only that, it is necessary to do so as a result of that action or other proceedings, amend the notice in respect of which the action or other proceedings were commenced by a further notice in writing given to the maker of the eligible film in question; and that notice or, if it has been amended by such further notice, that notice as so amended, shall be final and conclusive as to the earnings of that film for the purposes of these Regulations.

(5) If any action or other legal proceedings mentioned in paragraph (3)(a) hereof have been commenced and were not concluded as aforesaid, the Agency shall, at the conclusion thereof or of the last of them, give to the maker of the eligible film in question a further notice in writing of their determination of the earnings of that film; and the provisions of paragraphs

(2), (3) (with the omission of head (6)), (4) and (6) of this Regulation shall apply to the further notice of determination as they apply to a notice of determination given under paragraph (1) hereof.

(6) Where any action or other legal proceedings mentioned in paragraph (3) are abandoned, that paragraph shall have effect as if they had never been commenced.' [bold added]

[12] In the following English statutes/statutory instruments, the phrases very similar to 'action or other legal proceedings' appear:

(1) s.251G of the Insolvency Act 1986, entitled 'Moratorium from qualifying debts'. Section 251G(3) provides:

'(3) If on the effective date a creditor to whom a specified qualifying debt is owed has any such petition, action or other proceeding as mentioned in subsection (2)(b) pending in any court, the court may

(a) stay the proceedings on the petition, action or other proceedings (as the case may be), or

(b) allow them to continue on such terms as the court thinks fit.' [bold added]

Interestingly, s.251G of the Insolvency Act 1986, at subsection 2(b) contains:

'During the moratorium, the creditor to whom a specified qualifying debt is owed

(a) has no remedy in respect of the debt, and

(b) may not-

(i) commence a creditor’s petition in respect of the debt, or

(ii) otherwise commence any action or other legal proceedings against the debtor for the debt, except with the permission of the court and on such terms as the court may impose.' [bold added]

Given the word 'such' in s.251G(3), the statutory draftsman does not seem to have seen any distinction between 'other legal proceedings' and merely 'other proceedings'.

(2) s.130(1) of the Insolvency Act 1986

'

(3) Companies Act 1862, section 87, which provided:

'When an Order has been made for the winding up of a Company under this Act, no Suit, Action, or other Proceeding shall be proceeded with or commenced against the Company except with the Leave of the Court, and subject to such Terms as the Court may impose.' [bold added]

(4) Charitable Trusts Act 1853, section 17 provided, so far as relevant:

'Before any suit, petition, or other proceeding (not being an application in any suit or matter actually pending) for obtaining any relief, order, or direction concerning or relating to any charity, or the estate, funds, property or income thereof, shall be commenced, presented, or taken, by any person whomsoever, there shall be transmitted by such person to the said board, notice in writing of such proposed suit, petition or proceeding … and the said board, if upon consideration of the circumstances they so think fit, may, by an order or certificate signed by their secretary, authorise or direct any suit, petition, or other proceedings to be commenced, presented, or taken … either for the objects and in the manner specified or mentioned in such notice, or for such other objects, and in such manner and form, and subject to such stipulations or provisions for securing the charity against liability to any costs or expenses, and to such other stipulations or provisions for the protection or benefit of the charity, as the said board may think proper; and such board, if it seem proper to them, may by such order or certificate as aforesaid require and direct that any proceeding so authorised by them … shall be delayed during such period as shall seem proper to and shall be decided by such board … and (save as herein otherwise provided) no suit, petition, or other proceeding … shall be entertained or proceeded with by the Court of Chancery, or by any court or judge, except upon and in conformity with an order or certificate of the said board.' [bold added]

[13] The recent statutory predecessors to s.285(1) of the Insolvency Act 1986 are (ignoring the Insolvency Act 1985):

(1) section 9(1) of the Bankruptcy Act 1914 (now obsolete), was entitled 'Power to stay pending proceedings', and as originally enacted, read:

'The court may, at any time after the presentation of a bankruptcy petition, stay any action, execution, or other legal process against the property or person of the debtor, and any court in which proceedings are pending against a debtor may, on proof that a bankruptcy petition has been presented by or against the debtor, either stay the proceedings or allow them to continue on such terms as it may think just.'

(1) section 10(2) of the Bankruptcy Act 1883 (now obsolete), was entitled 'Discretionary powers as to appointment of receiver and stay of proceedings', and as originally enacted, read:

'The Court may at any time after the presentation of a bankruptcy petition stay any action, execution, or other legal process against the property or person of the debtor, and any Court in which proceedings are pending against a debtor may, on proof that a bankruptcy petition has been presented by or against the debtor, either stay the proceedings or allow them to continue on such terms as it may think just.'

[14] Two statutory provisions here:

(1) Section 228 of the Insolvency Act 1986.

'Where an order has been made for winding up an unregistered company, no action or proceeding shall be proceeded with or commenced against any contributory of the company in respect of any debt of the company, except by leave of the court, and subject to such terms as the court may impose.'

the same prohibition on commencement (or if ongoing, stay) applies in respect of unregistered companies

See Financial Conduct Authority v Carillion Plc (In Liquidation) [2022] Ch. 162, paragraph 27)

(2) Section 130(3) of the Insolvency Act 1986 reads:

'When an order has been made for winding up a company registered but not formed under the Companies Act 2006, no action or proceeding shall be commenced or proceeded with against the company or its property or any contributory of the company, in respect of any debt of the company, except by leave of the court, and subject to such terms as the court may impose.'

Note, there is no corresponding provision (prohibition) in relation to companies in voluntary liquidation. In Bank of Ireland v Colliers International UK Plc [2012] EWHC 2942 (Ch) at paragraph 32, David Richards J said:

'It is important to note that the requirement for permission for the commencement of proceedings applies to insolvency proceedings under the control of the court: bankruptcy, winding up by the court and administration. It does not apply to a company in creditors' voluntary winding up.'

[15] For completeness, the whole of s.130 of the Insolvency Act 1986 will be set out. Section 130 is entitled 'Consequences of winding-up order' and reads:

'(1) On the making of a winding-up order, a copy of the order must forthwith be forwarded by the company (or otherwise as may be prescribed) to the registrar of companies, who shall enter it in his records relating to the company.

(2) When a winding-up order has been made or a provisional liquidator has been appointed, no action or proceeding shall be proceeded with or commenced against the company or its property, except by leave of the court and subject to such terms as the court may impose.

(3) When an order has been made for winding up a company registered but not formed under the Companies Act 2006, no action or proceeding shall be commenced or proceeded with against the company or its property or any contributory of the company, in respect of any debt of the company, except by leave of the court, and subject to such terms as the court may impose.

(3A) In subsections (2) and (3), the reference to an action or proceeding includes action in respect of the company under Part 1 of Schedule 8 to the Finance (No. 2) Act 2015 (enforcement by deduction from accounts).

(4) An order for winding up a company operates in favour of all the creditors and of all contributories of the company as if made on the joint petition of a creditor and of a contributory.'

[16] Previous iterations of this provision (i.e. statutory predecessors) are:

(1) section 87 of the Companies Act 1862 (25 & 26 Vict c 89), which provided as follows:

'Actions and Suits to be stayed after order for winding up. When an order has been made for winding up a company under this Act no suit, action, or other proceeding shall be proceeded with or commenced against the company except with the leave of the court, and subject to such terms as the court may impose.'

(2) section 142 of the Companies (Consolidation) Act 1908 (removing the word “suit”);

(3) section 177 of the Companies Act 1929 (this extended the stay to provisional liquidations).

(4) section 231 of the Companies Act 1948 (11 & 12 Geo 6, c 38), which was entitled 'Actions stayed on winding-up order' provided:

'When a winding-up order has been made or a provisional liquidator has been appointed, no action or proceeding shall be proceeded with or commenced against the company except by leave of the court and subject to such terms as the court may impose.'

In Financial Conduct Authority v Carillion Plc (In Liquidation) [2022] Ch 162 ('Carillion'), David Richards J explained the position, under the heading 'Insolvency moratoria', at paragraphs 23 to 27:

'Since the mid-19th century, in the context of the winding up of companies, the Companies Acts have provided for a stay on “actions” and/or “proceedings” being brought against the company in liquidation without the leave of the court. As the company is in the hands of a liquidator who could be expected to carry out their duties in respect of the collection, realisation and distribution of the company's assets in an orderly and responsible way in the best interests of creditors, those assets should not have to be used and depleted in dealing with unnecessary actions and proceedings outside of the liquidation process.

Thus section 87 of the Companies Act 1862 (25 & 26 Vict c 89) provided as follows (emphasis added):

“ Actions and Suits to be stayed after order for winding up. When an order has been made for winding up a company under this Act no suit, action, or other proceeding shall be proceeded with or commenced against the company except with the leave of the court, and subject to such terms as the court may impose.”

A “suit” as distinct from an “action” was in those days a reference to proceedings brought in the Court of Admiralty, which was separate from the High Court until they were brought together by the Judicature Acts - see The Longford (1889) 14 PD 34, 38, per Bowen LJ. Following the absorption of the Court of Admiralty into the High Court in 1875, the language of “suit” became otiose and it was dropped from the later equivalent provisions, leaving just “actions” and “proceedings”. It is important to point out that the wording in the 1862 Act was focused on court processes hence the need to specify both “suit” and “action”, together with the related, eiusdem generis, category of “other proceeding”.

The successor provisions were consolidated into section 231 of the Companies Act 1948 (11 & 12 Geo 6, c 38) in the following similar terms (emphasis added):

“Actions stayed on winding-up order

“When a winding-up order has been made or a provisional liquidator has been appointed, no action or proceeding shall be proceeded with or commenced against the company except by leave of the court and subject to such terms as the court may impose.”

That language largely remains in the current section 130(2) of the Act which provides as follows (emphasis added):

“130 Consequences of winding-up order

“(2) When a winding-up order has been made or a provisional liquidator has been appointed, no action or proceeding shall be proceeded with or commenced against the company or its property, except by leave of the court and subject to such terms as the court may impose.”

By section 228 of the Act, the same stay applies in respect of unregistered companies.

David Richards J in Carillion then considered the provisions applicable before a winding up order is made, at paragraph 28:

Before a winding-up order is made, the court can impose a stay on the application of the company, a creditor or contributory. Section 126 of the Act provides as follows:

“126 Power to stay or restrain proceedings against company

“(1) At any time after the presentation of a winding-up petition, and before a winding up order has been made, the company, or any creditor or contributory, may - (a) where any action or proceeding against the company is pending in the High Court or Court of Appeal in England and Wales or Northern Ireland, apply to the court in which the action or proceeding is pending for a stay of proceedings therein, and (b) where any other action or proceeding is pending against the company, apply to the court having jurisdiction to wind up the company to restrain further proceedings in the action or proceeding; and the court to which application is so made may (as the case may be) stay, sist or restrain the proceedings accordingly on such terms as it thinks fit.”

There is a similar provision for unregistered companies in section 227 of the Act.'

[17] In Financial Conduct Authority v Carillion Plc (In Liquidation) [2022] Ch 162 ('Carillion'), Michael Green J, at paragraph 57, referred to Re Frankice (Golders Green) Ltd (In Administration) [2010] EWHC 1229 (Ch), [2010] Bus. L.R. 1608, [2010] 5 WLUK 116, a decision of Norris J on the scope of the administration moratorium imposed by paragraph 43(6) of Schedule B1 to the Act. Michael Green J said, at paragraph 58:

'The wording of paragraph 43(6) - “No legal process (including legal proceedings, execution, distress and diligence) may be instituted or continued” - is clearly very different from section 130(2) 's “no action or proceeding”.

So this level of divergence of wording, is 'clearly very different' from s.130(2) wording.

[17a] Though caution should be used drawing assistance from the use of a word in another statute, 'action' is a central word in the Limitation Act 1980, the main limitation act for England and Wales. Limitation applying to (almost) all causes of action.

In the Limitation Act 1980, 'action' is defined in s.38(1) as to include 'any proceeding in a court of law'.

(a) 'A petition initiating proceedings in court falls squarely within this definition.' - paragraph 66 of Zedra Trust Co (Jersey) Ltd v THG plc [2024] EWCA Civ 158; [2024] Ch 318 ('Zedra'), Court of Appeal (Lewison LJ, Arnold LJ, Snowden LJ) decision on 23.2.24; note, on 23.5.24, the Supreme Court gave permission to appeal in Zedra; the substantive hearing in the Supreme Court was on 17-18.2.25 before Lord Hodge, Lord Lloyd-Jones, Lord Briggs, Lord Burrows, Lord Richards. Judgment is awaited. Conversely,

(d) the issue of a 'community infrastructure levy stop notice' in the exercise of the powers conferred by the Community Infrastructure Levy Regulations 2010 reg.90, will not amount to an 'action' - see Jones v Shropshire Council [2025] EWHC 365 (Admin), a decision of the High Court (Mould J) on 21.2.25;.

[18] In Bristol Airport plc v Powdrill [1990] Ch 744 (“Powdrill”), which was an airline administration case. Sir Nicolas Browne-Wilkinson V-C (with which Woolf and Staughton LJJ agreed) gave the lead judgment. At pp 765F–766D of Powdrill, he referred to Quazi v Quazi [1980] AC 744:

'In Quazi v Quazi [1980] AC 744 the House of Lords held that a divorce by Talaq in Pakistan constituted other proceedings within the statutory phrase ‘judicial or other proceedings.’ But in that phrase the word ‘other’ must have referred to non-judicial proceedings since judicial proceedings had already been expressly referred to.'

[19] In Bristol & West Building Society v Trustee of the Property of John Julius Back (A Bankrupt) (also known as Re Melinek (A Bankrupt)) [1998] 1 BCLC 485 [1997] BPIR 358 ('John Back'), David Young QC sitting as Deputy High Court Judge said, at paragraph 25:

'[Counsel for the Applicant] contends that the court sitting in bankruptcy in an application for leave under section 285(3) should only concern itself with the appropriateness of whether proceedings should be brought by way of action or by way of proof in the bankruptcy proceedings. I do not think this is correct — indeed it would be contrary to Re ARO (supra) that court should have a free hand to do what is right and fair according to the circumstance of the case (albeit bearing in mind the principles set out herein relating to the exercise of that discretion).'

The reference to 'Re ARO' is a reference to Re ARO Co. Ltd [1980] 1 Ch 196 (decided 22.11.1979 - hence why it has 1979 in parentheses in the below quote). Earlier, the deputy Judge in John Back had recorded the submissions made to him by the s.285(3)(b) respondents / would be defendants / undischarged bankrupts, at paragraph 11:

'[Counsel] for the Respondents relied on In Re ARO Co. Ltd (1979) 1 Ch 196 at page 209 where in considering the discretion conferred by the words “except by leave of the court and subject to such terms as the court may impose” (as they were to be found in section 231 of the Companies Act 1948 which is the precursor to section 130(2) to the Insolvency Act 1986) the Court of Appeal (Brightman L.J.) held that those words were to be interpreted to give the court a free hand to do what is right and fair according to the circumstance of the case.'

In Re ARO Co. Ltd [1980] 1 Ch 196, Court of Appeal (Stephenson LJ, Brandon LJ and Brightman LJ), Brightman LJ gave the judgment of the court, and said, at 209:

The dispensing power in section 231 is not in terms dependent on the plaintiffs' establishing the status of secured creditors, but on the exercise of the court's discretion. The discretion is conferred by the words "except by leave of the court and subject to such terms as the court may impose." In section 325(1)(c) the discretion exercisable by the court in favour of the execution creditor is conferred by the words "the rights conferred by this subsection on the liquidator may be set aside by the court in favour of the creditor to such extent and subject to such terms as the court may think fit." The nature of this latter discretion has been considered in three recent cases. In In re Grosvenor Metal Co. Ltd. [1950] Ch. 63, 65, Vaisey J. said: "The section seems to give the court a free hand to do what is right and fair according to the circumstances of each case." In In re Suidair International Airways Ltd. [1951] Ch. 165, Wynn-Parry J. adopted the same construction of the subsection, as also did Pennycuick J. in In re Redman (Builders) Ltd. [1964] 1 W.L.R. 541. We consider that those cases were correctly decided. The only appreciable difference between the wording of the two sections is that section 325 includes the words "to such extent" as well as the words "subject to such terms." This appears to us a trivial distinction on which to found a decision that the discretion under section 231 is somehow narrower than the discretion under section 325. We adopt the definition of the discretion under section 325 as applied in the three cases mentioned and we consider that the discretion of the court under section 231 gives the court an equal freedom to do what is right and fair in the circumstances.'

[20] In Bristol & West Building Society v Trustee of the Property of John Julius Back (A Bankrupt) (also known as Re Melinek (A Bankrupt)) [1998] 1 BCLC 485 [1997] BPIR 358 ('John Back'), David Young QC sitting as Deputy High Court Judge, at paragraphs 13 and 14, referred to:

'Re Bank of Credit & Commerce International SA (No. 4) 1 BCLC 419 at 426 where Mr. Justice Jonanthan Parker in considering Re Exchange Securities & Commodities Ltd (1983) BCLC 186 held it is not necessary for the court to undertake any investigation into the merits of the allegations made in the proposed claim provided that if on the face of the matter there was no arguable claim then clearly leave should be refused — on the grounds no doubt that it would be a waste of time and expense.

What Parker J. went on to consider to be paramount in considering an application under Section 130 was whether separate proceedings as opposed to the winding-up process itself were the appropriate method for determining the proposed claims.'

[21] Seemingly, this is not an exhaustive list of the principles that might be applicable (as per paragraph 16 of Bristol & West Building Society v Trustee of the Property of John Julius Back (A Bankrupt) (also known as Re Melinek (A Bankrupt)) [1998] 1 BCLC 485 [1997] BPIR 358).

[21a] In Gardner v Lemma Europe Insurance Company Limited (In Liquidation) [2016] EWCA Civ 484 ('Gardner v Lemma'), Court of Appeal (Patten LJ; Kitchin LJ; Floyd LJ), a Gibraltar company was in liquidation ('Lemma') (paragraph 1), a liquidation recognised in the UK by English Court order (the 'Briggs J Order'). By reason of the Briggs J Order, and Article 20 of the UNCITRLA Model Law set out in Schedule 1 ot the Cross Border Insolvency Regulations 2006 ('2006 Regs'), an automatic stay was imposed on a set of UK proceedings pursued by a Mr Gardner, against Lemma ('UK Proceedings'). Mr Gardner issued an application for an order, lifting the stay on UK Proceedings, but that application was dismissed (paragraph 1).

Patten LJ in Gardner v Lemma described this shield, that the 2006 Regs offered such a company as Lemma, at paragraph 1, as:

'...the same protection against proceedings as would be conferred in the case of the liquidation of an English company by s.130(2) of the Insolvency Act 1986 (“IA 1986”). No action or proceeding shall be commenced against the company except by leave of the court.'

Patten LJ then said, at paragraph 2::

'The imposition of an automatic stay is designed to avoid the unnecessary expenditure of assets otherwise available for distribution amongst creditors and to support the replacement of a creditor's right to establish a claim by judgment in an action with a right to lodge a proof of debt. This process is inherently less expensive and carries with it a right of access to the Companies Court in the event that the proof is rejected: see Rule 4.83 of the IR 1986. Consistently with this, leave to commence proceedings will only be granted by the court when it is right and fair to do so in all the circumstances and is unlikely to be granted where the issue in the action could be dealt with as conveniently in the liquidation as in other proceedings: see Re Exchange Securities & Commodities Limited [1983] BCLC 186 at 196.'

[21b] On the facts in Gardner v Lemma Europe Insurance Company Limited (In Liquidation) [2016] EWCA Civ 484, the appeal against the refusal to lift the stay, was dismissed. Patten LJ said, at paragraph 15:

'In the absence of any challenge to the competence of the courts of that jurisdiction to determine the dispute in the liquidation, the need to preserve the estate for the benefit of creditors outweighs the contractual right of the insured in this case to have his claim determined in England.'

[22] In Bristol & West Building Society v Trustee of the Property of John Julius Back (A Bankrupt) (also known as Re Melinek (A Bankrupt)) [1998] 1 BCLC 485 [1997] BPIR 358 ('John Back'), David Young QC sitting as Deputy High Court Judge:

(1) outlined the s.285(3)(b) of the Insolvency Act 1986 ('1986 Act') before him, at paragraph 1:

'I have before me two Applications dated 3rd October 1996 filed pursuant to Section 285 (3)(b) of the Insolvency Act 1986 for leave to commence proceedings nunc pro tunc for damages/compensation in respect of the alleged negligence breach of contract and/or breach of trust of one Julius Back and/or one Stuart Samuel Melinek who at the relevant time were partners in the firm Julius Back & Co. (the Solicitors) and who are now the subject of bankruptcy proceedings.'

(2) considered, under the subheading 'merits', the arguments in favour and arguments against, and reach conclusions on, granting the s.285(3)(b) leave (permission) sought, at paragraphs 17 to 25. The exact facts of the case are unlikely to be relevant to future case, but certain passages have been put in bold, as these are potentially relevant to future cases. At paragraphs 17 to 25, the deputy Judge said:

'The Applicants' claim (as set out in their Writ) is for

(1) damages for loss and expense caused by the negligence and/or breach of contract of Julius Back & Co.

(2) damages for loss and expense in consequence of its reliance on certain warranties given by Julius Back & Co. to the Cheshunt Building Society in a Report on Title

(3) compensation for Julius Back & Co.'s breach of trust in disposing of an advance held by it, as trustee for the Cheshunt Building Society.

With regard to the claim for negligence and/or breach of contract Mr. Flenley contends that the affidavit in support of the Applicants' request for leave does not provide any evidence of causation, namely that the Cheshunt would not have entered into the transaction either at all or in the form it was had it known its true nature (viz. being the sale of property by a company in which the borrower was both a director and shareholder rather than a remortgage to the borrower on property owned by him). I do not consider such a contention makes the proposed claim unsustainable unless the affidavit is to be treated as a pleading which it is not. I consider the question of causation is not one which on the face of the matters is unsustainable albeit it will be an issue at trial.

With regard to the claim for breach of trust, reference was made to Bristol & West -v- Mothew (1996) 4 AER 698 in which the Court of Appeal held that to succeed in such a claim it is necessary to establish that the failure by the solicitor to provide the correct information was not merely an oversight but there must be proof of deliberate conduct to mislead or withhold information. The Applicants rely on the letter of 23rd February 1990 from Lewin Atkins & Company to Mr. Julius Back which appears to indicate that Mr. Back was aware of the true nature of the transaction. They say that taken with the fact that Messrs. Back and/or Melinek were acting for the Borrower, the Cheshunt and Silkstyle such an issue cannot be resolved at this stage of the proceedings prior to discovery and interrogatories. I agree that such issue will require further investigation and cannot be ruled out in limine as unsustainable.

Miss Maher for the Applicants contends that the Court should take account of the fact that on the 17th February 1997 the Solicitors Indemnity Fund made a “substantial” payment into court on behalf of the Respondents as a matter that there is at least a serious question to be tried. Such a fact whilst not conclusive does confirm my view that the claim on its face is not unsustainable or without foundation.

Mr. Flenley further contends that the Applicants' claim can be and should be dealt with by way of proof in the bankruptcy proceedings rather than by separate proceedings, relying on Re Exchange Securities & Commodities Ltd (1983) BCLC 186 which he submitted was a far more complex case involving some 2,000 investors whose monies it was contended were held in trust and therefore traceable and where Mervyn Davies J. held that the issues could be conveniently decided in the course of the winding up. I do not think this case assists Mr. Flenley. The liquidator by its counsel had undertaken to put before the court the only legal issue namely whether the investors monies created a valid trust claim.

In the present case the questions of negligence and breach of trust are matters which can only be resolved by court proceedings and are quite inappropriate to be decided by way of proof in the bankruptcy proceedings.

The proposed proceedings will be run by the Solicitors Indemnity Fund on behalf of the Respondents and will not prejudice the creditors in the bankruptcy proceedings provided any judgment obtained against the Respondents is not to be enforced without leave to the bankruptcy court (a condition to which the Applicants are willing to submit).

Finally Mr. Flenley submits that due to delay by the Applicants in commencing the proceedings against the Respondents they will be prejudiced if the action is allowed to proceed. Mr. Flenley relies on the following two matters:

(i) in an unsworn affidavit of Anneli Margaret Tucker dated 19th March 1997 a solicitor employed by Pinsent Curtis acting for the Solicitors Indemnity Fund it appears that Anneli Tucker on the 13th August made certain enquiries as to the whereabouts of Christine Davies, the person who was assisting Messrs. Back and Melinek at the time of the “remortgage” transaction. She states she did not follow up those enquiries at the time because the Applicants had not yet obtained leave to pursue its actions. Pinsent Curtis received draft applications and supporting evidence for leave by letter dated the 22nd August so that failure to make further enquiries at that time cannot be laid at the Applicants' door. Anneli Tucker states that from recent enquiries with the Law Society, it appears that Ms. Davies' student membership was terminated in December 1996 and The Law Society was unaware of her present address or her married name but that they might be willing to forward letters from Pinsent Curtis to her last known address.

I do not consider the extra difficulties which face the Solicitors Indemnity Fund in tracing Ms. Davies should preclude the Applicants from pursuing their claim. Ms. Davies' evidence is not essential to the Respondents case as it is accepted they were responsible for overseeing her work. Nothing will turn on words spoken by Ms. Davies or their interpretation (of. Shtun -v- Zahejska (1996) WLR 1270 at 1285). Mr. Peter Fisher-Jones, the solicitor acting for the Applicants states that the conveyancing file (which was eventually retrieved on the 21st May 1996) is comprehensive and he exhibits certain of the correspondence showing the direct involvement of Messrs. Back and Melinek.

In any event given that Ms. Davies appears to have been married her whereabouts ought to be determinable from the Marriages Registry with the employment a reasonable inquiry agent.

(ii) the fact that the transaction occurred some 7 years or so ago will inevitably have lead to impairment of the memories of the Respondents and any other witnesses. Whilst as a generalisation this is so, I do not consider it should preclude the Applicants from bringing these proceedings (commenced within the limitation period) for the reasons already given with regard to Ms. Davies's evidence; namely that the proposed claim by the Applicants does not turn on precise words used but on the general conduct of the Respondents with regard to the particular transaction the subject of documentary evidence.

Miss Maher contends that the court sitting in bankruptcy in an application for leave under section 285(3) should only concern itself with the appropriateness of whether proceedings should be brought by way of action or by way of proof in the bankruptcy proceedings. I do not think this is correct — indeed it would be contrary to Re ARO (supra) that court should have a free hand to do what is right and fair according to the circumstance of the case (albeit bearing in mind the principles set out herein relating to the exercise of that discretion).'

(3) Under the heading 'Conclusion', the deputy Judge said, at paragraph 26:

'For the reasons set out herein I give leave to the Applicants to pursue their claims against the Respondents as formulated in the Amended Writs on condition that any order against the Respondents (or either of them) will only be enforced with leave of the bankruptcy court.'