Amendments to Applications

Amendments to Applications

Published: 27 January 2017

A recent High Court decision highlighted the Court’s extensive discretionary and case management powers, albeit in circumstances in which the presiding Master (Master Matthews) opted against exercising his discretion to grant the application.

Applications to amend statements of case before the courts have decided the cases in question are often issued but in Agents Mutual Ltd v Moginnie James Ltd [2016] EWHC 3384 (Ch) the issue before the Court was whether or not an application notice could be amended. 

The High Court ruled that it does have the power to permit such amendment, pursuant to CPR 3.1(2)(m) on the basis that the court can “take any other step or make any other order for the purpose of managing the case and furthering the overriding objective...".

The Court was hearing the claimant’s summary judgment application regarding the defendant’s counterclaim. The claimant sought leave to add further grounds to its application notice. The defendant opposed, primarily on this occasion on the footing that such application would amount to a further standalone application in circumstances in which any new application would have been caught by a stay on proceedings. 

The Master considered the CPR and concluded that neither CPR 23 (applications) nor CPR 24 (summary judgments) deal with the question of amendment and CPR 17 covers only amendments to statements of case but not applications.

However, on this occasion, the Court decided that the requested amendments had been raised late and would adversely impact on the timing of a scheduled hearing.  The stay on future applications was also a concern for the Master and the application was refused.

 

TUPE considerations when purchasing the business and assets of an insolvent company

 

In the context of the transfer of a business pursuant to the Transfer of Undertakings (Protection of Employment) Regulations 2006 (SI 2006/246) (”TUPE”), where an employee is dismissed by reason of the transfer, it will be automatically unfair unless it is for an “ETO” reason: economic, technological or organisational.   In an insolvency context it can be difficult to determine if dismissals by insolvency practitioners before a transfer are for an ETO reason.  One of the more prominent cases on the subject was the Court of Appeal decision in Crystal Palace FC Ltd and another v Kavanagh and others [2013] EWCA Civ 1410 in which the Court reinstated the decision of the original employment tribunal in concluding that the pre-transfer dismissals of four employees were not automatically unfair.

In a potentially far-reaching decision, the West Midlands employment tribunal has recently ruled that employees who have been unfairly dismissed from an insolvent employer can bring a claim against a connected company acquiring the business of the insolvent company, in this case, Project Viva Limited (In Administration) (“Viva”).

One of Viva’s shareholders (35% shareholder, Mrs Dorrell – wife of the former Conservative health secretary, Stephen Dorrell) wished to take over Viva.   This was opposed by another 35% shareholder and her husband (Mr and Mrs Rogers) who had helped set up Viva.   The Rogers claimed that they had been forced out by Mrs Dorrell and her husband but the latter maintained that the positions of Mr and Mrs Rogers had become redundant. The Rogers claimed unfair dismissal and Viva was then placed into administration because, according to Mr Dorrell, “the board concluded that it was unable to meet its obligations”.  A pre-pack sale of Viva’s business and assets to an investment company wholly owned by Stephen Dorrell (Dorson Transform Limited (“Dorson”)) then followed.   Pixel West Limited (another company owned by Mr Dorrell) was added as a respondent to the tribunal claim, pointing to a “sham redundancy exercise”. 

Despite nine jobs having been saved on account of the transfer to Dorson (and, one assumes, the sale having been effected in the best interests of the general body of creditors), the tribunal judge was unimpressed, ruling that “there was a commonality of ownership and directorship between the companies […]”, also allowing the unfair dismissal claims to be brought against Pixel West Limited.  The unfair dismissal claims will be heard in May 2017.

Insolvency practitioners and prospective purchasers of insolvent businesses must bear in mind when conducting negotiations - and concluding pre-pack sales in particular - that the acquiring company can be found liable, when claims have been brought against the insolvent company, to meet the employment liabilities of the insolvent company pursuant to TUPE.

By Alejandro Worthington

Insolvency Partner

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.