As practitioners we pour over notices of intention to appoint (NOIA) and notices of appointment of administrators (NOA) to make sure every detail is accurate. Why? Because no one wants to risk an invalid appointment because there was a minor mistake or error that was overlooked. Understandably errors occur, particularly when the appointment of administrators often happens at speed, with all parties inevitably juggling many balls. Prescribed information may have been missed, or incorrectly stated and procedural steps may have been inadvertently forgotten.

The approach the judiciary take to a defect and the effect on an appointment has moved on a long way since the days of prescribed forms, when a failure to use the right form might had resulted in an invalid appointment, or a step that was described in the Insolvency Rules as a “must” was often considered fatal if not done. 

Now the court will consider whether it was intended that a breach of Schedule B1 or the Rules should result in an invalid appointment – dividing defects (as per Euromaster) into those which go to the power to appoint (where a breach is more likely to cause an invalid appointment) and those where the breach is procedural in nature (where it generally won’t). Even where a defect is more fundamental, we have seen the court take an even more holistic approach and find a pragmatic solution that enables the company to stay in administration where it is clear that it should be –Re Tokenhouse is an example of this. 

Why then do we still fret over whether every “i” is dotted and “t” is crossed? Perhaps this is just a hangover from the days of prescribed forms where such errors were problematic, have we all been conditioned to be uber cautious?

This may explain why we continue to see practitioners seek confirmation from the court that their appointment is valid – not wishing to take any risk that it is not, and indeed a number of cases where the appointment has been challenged based on procedural hiccups. 

The most recent example of a practitioner doing this is the case of Haw & Anor v QM Systems Ltd [2024] EWHC 1944 (Ch) (29 July 2024) where the court considered

• the requirement in the Rules to file three copies of the NOA with the court (in this case only one had been filed);
• an error in the heading of the notice (in this case it referred to the appointment being made by the company not the directors); and
• failure to file the consent from the qualifying floating charge holder (QFCH) (who had consented but evidence hadn’t been filed with the NOA).

The judge determined that in respect of (a) and (b) that these were defects that were capable of remedy under r12.64 – being purely procedural in nature. It is not 100% clear whether (c) was remedied under r12.64 although it appears that it might have been given the judge concluded there was no conceivable prejudice – the QFCH having consented – and that there would be no injustice if the defect was “cured”.

Do you need to file three copies of the notice of appointment?

We are not sure that you do, given that CPR Practice Direction 510 says a document that is filed electronically should consist of one copy only (para 5.1) and the Insolvency Service suggest in their First Review of the Insolvency Rules 2016 that r1.46 allows the filing requirements in the Rules to be overriden by the court rules contained in PD51O. But para 5.1 of PD51O is qualified and rule 1.46 does refer to delivery, not filing – the position is not clear cut.

The need to file three made sense when practitioners physically filed the documents – one copy for the court, one for the administrator and one for the practitioner’s file, but with ce-file, the requirements of PD510 and the ability to download as many copies of the sealed notice of appointment as required this requirement no longer makes sense. The Insolvency Service also plan to change the Rules so that there is no longer a requirement for the Court to return multiple electronic copies of documents but will this apply to the requirement to return three copies of a sealed notice of appointment? That is not clear but in practice, the court does not do this anyhow. 

None of these points are reflected on by the judge in his judgment. This is no criticism of the judge – he is unlikely to have been referred to them.

In practice many practitioners file one copy but will this practice change in light of this judgment? We’ll have to wait and see. The judgment isn’t binding on another court, and some may take the view that PD510 allows practitioners to file one copy. There is no practical sense in filing more than one but as noted above if there is doubt practitioners often err on the side of caution to avoid risk and we expect that practitioners will now file three copies if they didn’t before.

Do practitioners need to be more relaxed?

We are starting to get a long(ish) list of examples where the court has found that missing or incorrect information in the appointment documents does not invalidate the appointment:

• incorrect heading on the notice of appointment
• failure to include a paragraph 100 statement (Perhar)
• failure to include a time and date of appointment (Spaces London Bridges)
• failure to attach a consent from a QFCH even though consent had been obtained
• failure to include the MIPD wording when completing a remote swear (Re Active Wear)

However, these do not seem to assure practitioners that if there is a mistake in a notice that their appointment is not invalid – despite the court taking a more “relaxed” approach, comfort from the court that procedural defects do not invalidate an appointment and notwithstanding that practitioners do have leeway when it comes to prescribed information (see our previous blog and Rule 1.9). Those assurances are probably never going to balance the consequences of an invalid appointment, and therefore the risk. It is therefore understandable why some practitioners will wish to ask the court to confirm the validity of their appointment because an “i” hasn’t been dotted or a “t” hasn’t been crossed.

Bring back prescribed forms – yes please.