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10 January 2019
In a recent case, two joint administrators applied to the Royal Court of Guernsey seeking an order that it issue a letter of request to the High Court of Justice of England and Wales, requesting the High Court to act in aid of and auxiliary to the Royal Court pursuant to Section 426 of the Insolvency Act 1986 in recognising the appointment of the joint administrators as administrators of the company in question.
While the Royal Court has dealt with incoming letters of requests, in making the application, counsel was unaware of any reported (or indeed unreported) case where the Royal Court's jurisdiction to issue a letter of request had previously been considered.
Looking at Section 426(4) of the 1986 act, it states as follows, "The Courts having jurisdiction in relation to insolvency law in any part of the United Kingdom shall assist the courts having the corresponding jurisdiction in… any relevant country or territory".
Again, while counsel was unaware of any case where the English courts had assisted the Royal Court, there have been several occasions where it has done so in respect of Jersey companies.
The Insolvency Act 1986 (Guernsey) Order 1989 is somewhat surprisingly not directly relevant to the question of whether the Royal Court of Guernsey might issue a letter of request, but in fact deals with the receipt by the Royal Court of such a letter from another British court. However, the joint administrators submitted that the very existence of the 1989 order is reflective of the principles of comity and assistance between the courts of England and Guernsey.
The Royal Court of Jersey's jurisdiction to issue a letter of request as a matter of authority and principle is well-established and has been applied on several previous occasions – in particular, In the Representation of the Viscount and in the matter of the desastres of Cochrane and Orb ARL (for further details please see "What the first Jersey insolvency case of its kind in 40 years means for 'back door' to English administration") and REO (Powerstation) Limited (for further details please see "Court rules on letters of request for administration orders"). The joint administrators submitted that the approach by the Jersey court is the correct approach to take and is a persuasive authority in Guernsey.
While the court retains discretion to issue a letter of request, the joint administrators submitted that, in the circumstances of the present case, the court should exercise its discretion to do so, as the letter of request sought recognition of the administration order and the appointment of the joint administrators in the High Court, which was a straightforward request (eg, compared with an application that seeks more detailed assistance from the High Court, such as using the powers under the UK Insolvency Act to clawback transactions or interrogate directors or third parties).
The primary reason for the joint administrators' application was to seek recognition of the Guernsey statutory moratorium in England and Wales for the purposes of the proceedings there. The point was made that the English court would be responsible for deciding whether to grant the request, and on what terms. However, the joint administrators submitted that in circumstances where the English moratorium is potentially much wider than the Guernsey moratorium,(1) the Royal Court should not be reticent in requesting the assistance of the English court to recognise both the administration and the effect of Section 377 of the Companies Law in England and Wales. It was further submitted that there were no matters which might weigh in favour of the court exercising its discretion to refuse the application for the letter of request.
In the circumstances, the Royal Court was satisfied that it had jurisdiction to order the issuance of the letter of request (and did so), noting the following:
The matter was heard in camera but it is expected that the Royal Court will issue an anonymised written judgment in due course, noting the lack of authority on the point in Guernsey.
For further information on this topic please contact Mathew Newman or Sam Dingle at Ogier by telephone (+44 1481 721 672) or email (firstname.lastname@example.org or email@example.com). The Ogier website can be accessed at www.ogier.com.
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