English Court of Appeal holds s236 Insolvency Act Examinees Immune from Suit
The English Court of Appeal’s recent decision in Al Jaber v Mitchell confirmed (for the first time in the English Courts) that directors examined under section 236 of the Insolvency Act 1986 enjoy the same level of immunity from suit that other participants to legal proceedings are afforded.
The case arises out of the BVI liquidation of MBI International & Partners Inc. The BVI-appointed liquidators of MBI obtained recognition in England as "foreign representatives" under the UNCITRAL Model Law and thereafter sought to examine various persons involved with MBI, including the respondent, under s236 of the IA 1986. In substance, section 236 empowers the Court to summon and examine any officer of a company in liquidation; any person known or suspected of having property belonging to the company, or being indebted the company; or any person the Court thinks capable of giving information about the promotion, formation, business, affairs, dealings or property of the company.
Having conducted their s236 examinations, the liquidators then sought to amend their points of claim in an action already before the English High Court to allege certain breaches of duty against the respondent in his capacity as a director of MBI. The respondent unsuccessfully contested the application to amend at first instance on the basis that the amendments arose out of the information given in the s236 examination.
On appeal, the Court held in favour of the respondent that:
- a s236 examination is clearly part of a wider “judicial proceeding”,
- it follows that liquidators will have immunity from suit in respect of the questions they ask or things said in the examination (drawing an analogy with the Court of Appeal’s earlier decision in Mond v Hyde [1999] QB 1907 CA), and
- it would be a curious situation if the Judge and liquidator enjoyed immunity but the examinee did not.
This decision will no doubt be of relevance in other common law jurisdictions that provide similar regimes for Court-based examinations of company officers and other relevant persons.
