Al Jaber and others v Mitchell and others [2021] EWCA Civ 1190

Last Friday, the Court of Appeal handed down judgment in Al Jaber v Mitchell [2021] EWCA Civ 1190, a keenly awaited decision which considers with the application of the doctrine of immunity from suit to statements given by a former director during an examination under section 236 Insolvency Act 1986.

The case concerned re-re-amendments mid-trial to the liquidators’ misfeasance claim, which wished to allege that a former director had given inaccurate answers (on oath and by witness statement) in a s236 examination, and alleged that the company had a cause of action in respect of those answers.

At first instance, the judge had decided that these claims were not barred under the doctrine of immunity from suit, because the examination was not a “judicial proceeding” where the examinee was a “witness giving evidence”. The Court of Appeal overturned the Judge’s decision, holding that that the new claims were barred, and that the first instance judge had taken an overly narrow view of the immunity.

Lady Justice Asplin (with whom Sir Nicolas Patten and Lady Justice Carr agreed) noted that although immunity from suit had been expressed to apply to “court” proceedings, the rule was not quite so broad – the individual context where the rule was being applied needed to be examined.

Although an s236 examinee could not be equated with an ordinary witness, and although the examination was a “very different creature” from an ordinary trial, the examination took place as part of the general winding-up which was managed by the court and which gave rise to winding-up proceedings. The examination was one of the “procedural powers” which enabled a liquidator to locate the assets of the company as part of the compulsory winding-up procedure, during which the liquidator is acting as an officer of the court. These wider proceedings were “judicial proceedings” which benefited from the immunity; they were commenced with an order of the court and supervised by the court. The judge had therefore erred in focusing on the s236 examination itself: it was not necessary to decide whether during the examination, the examinee was a witness giving evidence because the wider context was sufficient to give the examinee protection. Further, the judge supervising the examination and the liquidator conducting the examination would both have the benefit of immunity from suit, which pointed towards the examinee also being protected.

Finally, the court was not convinced that providing an immunity would have any significant chilling effect as a matter of public policy. On the contrary, the fact that an open and honest examinee could (without immunity) be liable to civil claims based on their attempts to co-operate would undermine the usefulness of s236 as an information gathering tool. Further, although there would not be a cause of action arising from the examination itself, claims could still be made for a failure to disclose in breach of the duty under section 235 Insolvency Act 1986 where applicable.

Looking forward

As both courts noted, this was a novel situation which had not previously been considered – no doubt because claims strictly on the basis of what is said to a liquidator will be rare. This is a welcome clarification that answers given as part of a s236 examination will be protected, although examinees will of course have to be aware that the court’s general powers of contempt are still engaged, and that the Court of Appeal did consider that claims for failure to disclose (where such duties exist) would not infringe the principle.

The Court of Appeal did not give a view on whether immunity may attach to more informal demands made under s235 by liquidators. Certainly on the court’s reasoning, this remains a possibility since the liquidator will be utilising the same “procedural powers”, and there will be the same on-going judicial proceedings, which was the Appellants’ position at first instance. Further authority may be needed on this question in the future.

Clare Stanley QC and Lemuel Lucan-Wilson (instructed by Baker & McKenzie) acted for the successful appellants.

The full judgment is available to read and download here.