Liquidator Investigations And Witness Immunity

Published date29 September 2021
Subject MatterCorporate/Commercial Law, Insolvency/Bankruptcy/Re-structuring, Corporate and Company Law, Insolvency/Bankruptcy
Law FirmCollas Crill
AuthorMr Simon Hurry

In Al Jaber v Mitchell [2021] EWCA Civ 1190 the English Court of Appeal has recently grappled with the issue of whether the statements made by a former director during a mandatory court supervised examination under section 236 of the Insolvency Act 1986 (the IA) are covered by witness immunity.

Typically, an individual will have a choice as to whether to provide information. However, there are exceptions, such as where an individual is compelled to provide information in the context of an insolvency process.

An integral part of an insolvency office holder's role is to investigate the circumstances that led to the insolvency and identify realisable assets and claims against wrongdoers to make recoveries, increasing distributions to stakeholders. In general terms, Section 236 of the IA empowers an office holder to require an individual to provide information and documents relating to an insolvent company and/or to attend a private examination in court. It's an important tool.

There are similarities in this regard between section 236 of the IA and article 183 of the Companies (Jersey) Law 1991 (the Companies Law). Article 183 of the Companies Law empowers a liquidator of a company to require (among others) any current or former director or secretary of the company, employee or person who was an employee in the 12 months before the start of the winding up of the company to:

  1. give the liquidator any information about the company and its business, dealings, affairs or assets the liquidator reasonably requires; and
  2. meet with the liquidator at any reasonable time on being given reasonable notice.

In addition and similar to article 234 of the IA, article 180(1) of the Companies Law enables the liquidator to apply to the Jersey Court for an order requiring any person who has possession or control of any asset or record to which the company appears to be entitled to pay, deliver, surrender or transfer the asset or record to the liquidator.

What is witness immunity?

The counterbalance to being compelled (forced) to provide information is an immunity to civil proceedings arising from statements that a witness makes (subject to certain limited exceptions). The UK's Supreme Court in Jones v Kaney [2011] UKSC 13 summarised the justifications for witness immunity given by the House of Lords in Darker v Chief Constable of the West Midlands Police [2001] 1 AC 435 as follows:

  1. to protect witnesses who have given evidence in good faith from being harassed and vexed by...

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