[2025] EWHC 2316 (Ch)

The argument based on ousting the powers of the court

Section 212 IA 1986 confers upon the court jurisdiction to compel a liquidator who has misapplied or retained, or become accountable for, any money or other property of the company, or been guilty of any misfeasance or breach of any fiduciary or other duty in relation to the company –

“(a)

to repay, restore or account for the money or property or any part of it, with interest at such rate as the court thinks just, or

(b)

to contribute such sum to the company’s assets by way of compensation in respect of the misfeasance or breach of fiduciary or other duty as the court thinks just.”

Subsection 212(2) makes it clear that:

“any misfeasance or breach of any fiduciary or other duty in relation to the company includes, in the case of a person who has acted as liquidator of the company, any misfeasance or breach of any fiduciary or other duty in connection with the carrying out of his functions as liquidator of the company”.

Under s.212(4), the court’s jurisdiction under that section may be exercised even after the liquidator has had their release pursuant to s.173 IA 1986 if leave is given by the court (as has been the case in these proceedings).

Counsel for the Claimants argue that any attempt to limit or exclude the potential liability of the Former Liquidators in their capacity as appointed liquidators would be an attempt to oust the court’s jurisdiction under the IA 1986 and to alter the legislative scheme. Accordingly, even if a monetary liability cap had been purportedly resolved by the shareholders upon appointing the Former Liquidators (which did not happen), it would be ineffective.

In support of this analysis the counsel for the Claimants have referred me to Aribisala v St James Homes (Grosvenor Dock) Ltd [2007] EWHC 1694. In that case Alan Steinfeld QC, sitting as a deputy judge of the Chancery Division, was considering s.49(2) of the Law of Property Act 1925 (“LPA 1925”), which provided that:

“[w]here the court refuses to grant specific performance of a contract, or in any action for the return of a deposit, the court may, if it thinks fit, order the repayment of any deposit”).

He found, at [33] that:

“The section is not in terms of conferring a right upon either party to the contract. What it is doing is conferring jurisdiction on the court, exercisable at its discretion, to order the repayment of any deposit, obviously necessarily paid by the purchaser. On its face, it seems to me that a provision in a contract that purports to exclude the section, as clause 1.2 of the conditions of sale of the contract in this case purports to do, is a provision that is purporting to oust the jurisdiction of the court under that section and that is, accordingly, on well-established authority void and of no effect on the ground of public policy.”

Counsel for the Claimants submit, likewise, that, it is not open to a company (whether acting through its directors or through its shareholders) to oust the statutory jurisdiction of the court by way of contract, particularly given that the relationships created by a liquidation cannot be considered to be bilateral relationships but have an effect on members and creditors. They argue that any attempt to do so must similarly be void and of no effect as a result of public policy.