Extra-Territorial Effect Of Section 236 – The Debate Continues

Re Omni Trustees Ltd (In Liquidation) [2015] EWHC 2697 (Ch)

In an interesting judgment, the High Court in Manchester has decided not to follow the ruling from earlier this year of Mr Justice Richards in Re MF Global (UK) Ltd[1], deciding instead that section 236 of the Insolvency Act 1986 (the "Act") does indeed have extra-territorial effect. The decision in MF Global was covered in our blog in August (click here for article) but the judgement of Judge Hodge in Omni Trustees Ltd (in liquidation) illustrates that the question continues to be open for further debate.

The application

The matter before Judge Hodge in this instance was an application brought by the Official Receiver acting in its capacity as liquidator of Omni Trustees Ltd (the "Company"). The Official Receiver sought an order against Mr Tristram Michael Norriss pursuant to section 236 of the Act, for the production of documents in his possession or control. The Company acted as trustee of an occupation pension scheme, and in July 2014 around £3.7m of the scheme's £8.6m worth of assets, was transferred from the Company to a scheme located in Hong Kong which apparently acted by the respondent, Mr Norriss. The object of the application was to ascertain what had happened to the £3.7m that was transferred.

The application in this instance did not seek the examination of Mr Norriss, either in England or Hong Kong but instead sought, pursuant to section 236, that Mr Norris produces a witness statement with supporting documents to explain the transfer of monies. It should be noted that Mr Norriss did not attend the hearing before Judge Hodge, nor was he represented at the hearing, and the judgment should be considered in light of the absence of any serious counter-arguments.

Mid East Trading anyone?

Counsel for the applicant drew Judge Hodge's attention to the "classic test" for granting an order under section 236 which is set out in British and Commonwealth. Hodge J was satisfied that the test set out by Lord Slynn was satisfied; the documents required by the applicant were necessary to allow it to carry out its statutory functions and did not impose any unnecessary or unreasonable burden on the respondent.

Referring to the decision in MF Global, Judge Hodge noted Justice Richard's conclusion that, in the absence of authority and in the absence of what is now section 237(3), there was a good deal to be said for concluding that section 236 was intended to have extra-territorial effect...