Vol 14 (2017) - Issue 2

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Re MF Global UK Limited [2015] EWHC 2319 (Ch) (David Richards J, 31 July 2015)

Introduction
In a reserved decision handed down on 31 July 2015 in Re MF Global UK Limited [2015] EWHC 2319 (Ch), following three days of adversarial argument, David Richards J (as he then was) decided that section 236 of the Insolvency Act 1986 ('IA86') does not have extraterritorial effect. In Re Omni Trustees Limited [2015] EWHC 2697 (Ch), HHJ Hodge QC (sitting as a Judge of the High Court) decided, on an unopposed application and giving an extemporary judgment, not to follow David Richards J’s judgment in Re MF Global, finding that section 236(3) IA86 does have extra-territorial effect.
Accordingly, there are now divergent rulings at first instance as to whether an order may be made under section 236(3) IA86 against a person with no presence in England. It would be helpful to have the Court of Appeal’s ruling on the question so as to dispel any doubt as to the correct legal position, and to clarify the territorial scope of section 236 IA86 generally (and not just section 236(3) IA86).

A. The statutory provisions
Section 236(2) IA 1986 provides that the Court may, on an application by an officeholder, summon before it:
'(a) any officer of the company; (b) any person known or suspected to have in his possession any property of the company or supposed to be indebted to the company; or (c) any person whom the court thinks capable of giving information concerning the promotion, formation, business, dealings, affairs or property of the company'
By section 236(3) IA86, the Court may require any such person to submit to the Court an account of his dealings with the company, or to produce any books, papers or other records in his possession or under his control relating to the company or the matters mentioned in section 236(2)(c) IA86. The Court’s powers under sections 236 and 237 IA86 to summon persons for examination apply to liquidation (and provisional liquidation), administration and administrative receivership, and materially
identical provisions applicable to personal insolvency are found at sections 366 and 367 IA86.

B. David Richards J’s judgment in MF Global
In Re MF Global, the joint special administrators applied for an order under section 236(3) IA86 against two companies, one of which was a French entity, seeking the production of documents and a full description by way of witness statement of the sales or auction processes by which they had closed out MF Global’s open positions very shortly after the appointment of the special administrators. The French entity argued that the Court had no jurisdiction to make such an order against it under section 236(3) IA86.
In deciding that he had no jurisdiction to grant an order under section 236(3) IA86 against the French entity, the Judge considered that he was bound to do so by the Court of Appeal’s decision in Re Tucker (a Bankrupt) [1990] Ch. 148.
In Re Tucker, a decision on section 25 of the Bankruptcy Act 1914 ('BA14'), which provided at section 25(6) that: 'The court may, if it thinks fit, order that any person who if in England would be liable to be brought before it under this section shall be examined in Scotland or Ireland, or in any other place out of England.' The Respondent in Re Tucker was resident in Belgium. Dillon LJ, giving the Court of Appeal’s judgment, referred to the rule of construction that, unless the contrary is expressly enacted or plainly implied, United Kingdom legislation is applicable only to British subjects or to others who by coming to the United Kingdom, whether for a short or a long time, have made themselves subject to British jurisdiction; and held, applying this rule and taking into account various other matters, that section 25(6) BA14 had no extra-territorial effect.