Neutral Citation Number: [2009] EWHC 2580 (Ch)
Case No: No 7475 of 2006
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 23/10/2009

Before :

MR JUSTICE WARREN
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Between :

	IN THE MATTER OF FAREPAK FOOD AND GIFTS LIMITED
AND IN THE MATTER OF THE INSOLVENCY ACT 1986
DERMOT POWER (1)
MARTHA HANORA THOMPSON (2)
(Joint Liquidators of Farepak Food and Gifts Ltd)	

Applicants	
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	H M REVENUE AND CUSTOMS (1) 
SUZY HALL (2)	Respondents	
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Ms Lexa Hilliard QC (instructed by Addleshaw Goddard LLP) for the Applicants
(Representatives of the Respondents not being present)
Hearing dates: 22nd January 2009 and 31st July 2009
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Judgment
Mr Justice Warren : 
Introduction
1.	Farepak Food and Gifts Ltd (“Farepak”) went into administration on 13 October 2006.  It is now in liquidation.  The applicants in the present application are the Joint Liquidators of Farepak.  They seek a final order for distribution of certain monies paid into the bank accounts of Farepak in the last few days before the commencement of the administration.

2.	The matter came before Mann J on 15 December 2006.  He delivered a judgment on 18 December 2006.  Representation before Mann J followed an order which had previously been made by Briggs J. By his order dated 12 December 2006, he directed

a.	the appointment of a creditor (in the event, HMRC a major creditor of Farepak) to represent the interests of unsecured creditors and in particular to contend that no trust was created over the relevant funds in favour of any Customer;

b.	the appointment of a Customer (in the event, Ms Suzy Hall) to represent the interests of Customers to contend that a trust was created in favour of all Customers; and

c.	the administrators (one of whom was the second applicant and one of the current Joint Liquidators) to advance arguments in support of the existence of a trust in favour of Customers whose monies were paid into one of Farepak’s accounts on or after 11 October 2006, whose monies were paid to Farepak on or after 11 October 2006 or whose monies were paid to Farepak after close of business on 13 October 2006.  

3.	Before Mann J, the administrators were represented by Lexa Hilliard (now QC) (instructed by Taylor Wessing); she appears before me on behalf of the Joint Liquidators.  HMRC were represented by Jonathan Lopian; and Ms Hall was represented by Anthony Trace QC and Matthew Smith.  Neither HMRC nor Ms Hall are represented in front of me.  But their respective solicitors have consented to or do not oppose the order which is now sought.  I say which is now sought since I had concerns about the order which was sought at the hearing.  Those concerns have now been addressed and a slightly different order is sought.  It is not necessary for me to explain the differences.  I shall simply consider the order which is now sought.  Ms Hilliard remains, of course, the advocate responsible for protecting the interests of those described in paragraph 2c above.  She considers that the order sought is in the interests of those persons just as the solicitors of HMRC and Ms Hall consider that the interests of their classes are properly reflected in the order sought.

4.	The background, which I gratefully adopt with adaptations from Ms Hilliard’s skeleton argument is in summary as follows.

5.	Farepak operated a Christmas savings scheme; it ran in this way:

a.	Customers placed orders with Farepak for a hamper, gifts or shopping vouchers (“Goods”).  They did so through other Customers who for this purpose were known as “Agents”.   One of the questions addressed by Mann J was whether these Agents were agents of the Customer or of Farepak.

b.	Some Customers, although described as Agents, acted only for themselves.  But others acted in relation to several Customers, typically family and friends.

c.	Customers who were not themselves Agents made regular small weekly payments to the Agent with whom they dealt over roughly a 45 week period in respect of their orders.

d.	Agents would collect the weekly payments from the Customers for whom they were responsible and would pay the monies collected (including any payment of their own) into Farepak’s bank accounts.

e.	After full payment had been made in respect of the order, the Goods would be delivered to the Agent shortly before Christmas for onward distribution to the Customers.

f.	If an order was cancelled, the payments would be refunded by Farepak to the Customer via the Agent.

6.	Agents paid monies received from Customers to Farepak in a number of ways but ultimately they would find their way to account number 01016245 (“the FFG Current Account”) held with National Westminster Bank plc (“NatWest”).  

7.	After close of business on 10 October 2006, Farepak ceased trading. On 12 October 2006 the directors of Farepak caused Farepak to declare a trust over moneys paid into bank account number 50114239 held with the Royal Bank of Scotland (“RBS”). According to Mr Fowler, one of the directors of Farepak, the reference to account number 50114239 was a mistake and the account that the directors intended to refer to was the FFG Current Account, being the account into which Customers’ monies had been paid.

8.	Administrators of Farepak were appointed on Friday 13 October 2006 at 4.13pm But Agents continued to collect and pay monies into the banks which were credited to the FFG current account; apparently RBS/NatWest were unable to stop this process.

9.	As at 4 December 2006, monies standing to the credit of accounts then held by RBS/ NatWest including the FFG Current Account amounted to £1,691,782.83 

10.	On 8 December 2006 the Administrators made an application seeking to determine whether any of part of the sum of £1,691,782.83 was held on trust for Agents (for the benefit of themselves and their Customers).  They sought a more general direction whether, as had been alleged by a number of Customers, all monies paid to Farepak by Agents throughout 2006 were held on trust for Agents for the benefit of themselves and the Customers.  

11.	On 12 December 2006 Briggs J made the representation order which I have already referred to at paragraph 2 above.

12.	As I have mentioned, Mann J handed down his judgment on 18 December 2006.  On the basis of the limited evidence available to him, he declined to make any order on the application at that stage but left the door open for the parties to apply back to the Court to re-argue the matter on a subsequent occasion.  However, he did express some views which can be summarised in this way:

a.	An Agent received monies from a Customer as agent of Farepak not as agent of the Customer; accordingly payment by a Customer to an Agent was payment to Farepak.

b.	There was no trust for the benefit of Customers of monies received by Agents prior to 10 October 2006.

c.	If and insofar as it could be established that moneys were paid to Farepak by Customers at a time when Farepak had decided to cease trading and at a time when it had indicated that payments should not be received, there was a strong argument that those moneys would be held by Farepak as constructive trustee from the moment they were received by Agents.

d.	The declaration of trust in respect of monies paid on or after 11 October 2006 could and should be rectified so that it reflected the true intention of Farepak which was to create a trust of the account into which Customer monies were still being paid after Farepak had resolved to cease to trade.

e.	The effect of a. above was that monies paid by Customers to Agents before 11 October 2006 but not paid by the Agent to Farepak by paying it into a bank account until on or after 11 October 2006 would not be held on a constructive trust because the monies were paid to Farepak prior to its ceasing to trade and there was no mistake of fact by the Customers.

f.	Even if the declaration of trust could be rectified there was a preference issue in relation to payments that had already been paid by Customers to Agents at the date of the declaration of trust and where the monies were subsequently credited to the FFG Current Account.

13.	The effect of the judgment was that the Administrators could not distribute any of the sums in the various accounts to Customers prior to Christmas 2006. However, since Mann J had not made any final determination, it was, in theory, open to the Joint Liquidators (or indeed HMRC and Ms Hall) to re-argue any of his provisional conclusions.  In particular, the Joint Liquidators could seek to persuade the Court that a trust was created of all monies paid into the Company’s bank account on or after 11 October 2008, irrespective of when the Customers had paid their Agents.

14.	Following the judgment, the Administrators and then the Joint Liquidators investigated whether there was further evidence of the relationship between Agents and Customers in order to justify a challenge to Mann J’s view that payment to the Agent was payment to the Company.  The evidence obtained did not really take matters much further; that evidence was equivocal, no doubt because there were no clear express terms governing the relationship between the Agent and the Customer in the documentation produced by Farepak; and so far as matters were dealt with on the ground, this was often informal since Agents were individuals who were usually family members or friends and the terms of the relationship were not formalized.

15.	As part of their investigations, the Administrators and the Joint Liquidators also analysed data received from Agents and Customers, namely Agent Control forms and Proof of Debt forms which they had produced.  The purpose of the Agent Control Forms and Proof of Debt forms was to identify the date on which any Customer made a payment to his Agent and the dates on which the Agent made a payment to a bank for the credit of the Company.  These documents were sent out before the first application to Court in December 2006 and a number were sent back without the Agents or Customers being aware of the substance of Mann J’s judgment. Thus the Joint Liquidators consider that they can have some confidence that the information contained in the forms is reliable and not made with the benefit of hindsight.  The Joint Liquidators’ staff have attempted to reconcile this information with the banking records which they have in order to arrive at a figure representing monies paid to Agents, or paid by Agents into Farepak’s bank accounts, on or after 11 October 2006 to the credit of the Company. 

16.	The Joint Liquidators identified 6 potential principal categories of beneficiary based on Agent Control forms and Proof of Debt forms and reflecting the points made by Mann J in his judgment.

17.	In the event the Joint Liquidators reached the conclusion that whilst, there were arguments in favour of a trust having been created of all monies paid into the Company’s bank accounts on or after 11 October 2006, the facts available to them had not changed markedly from those relied on by the Administrators at the hearing in December 2006. The Joint Liquidators had, therefore, no certainty that at a final hearing a judge would reach any different conclusion from the preliminary conclusions of Mann J.  HMRC, as representative of the unsecured creditors, felt it necessary to oppose the existence of any trust other than the limited version based on rectification of the deed of trust executed by the Company and thus limited to payments made by Customers to Agents on or after 11 October 2006.

18.	The Joint Liquidators consider that it would be difficult to challenge Mann J’s reasoning.   Given the strength of his reasoning, the lack of clear evidence and the costs of re-arguing the issue especially in the light of HMRC’s opposition, the Joint Liquidators took the view that the better course was to limit a final application to the 6 categories which they had identified.  Those 6 categories were as follows:

a.	Category One: - Agents with no Customers (“Sole Agents”) whose payments were credited to the Company’s accounts with NatWest on or after 14 October 2006 where payment was made by the Sole Agent on or after 11 October 2006. The claims amount to £20,915.81 in total.

b.	Category Two: - Sole Agents whose payments were credited to the Company’s accounts with NatWest on 11, 12 or 13 October 2006 where  payment was made by the Sole Agent on or after 11 October 2006. The claims amount to £13,687.43 in total.

c.	Category Three: - Agents with Customers (“Multi Agents”) whose payments including those of their Customers were credited to the Company’s accounts with NatWest on or after 14 October 2006 and where, according to the tables and figures compiled by the Joint Liquidators, the amount of the Multi Agent’s claim (for himself and his Customers) match those credits and where payments were made to the Multi Agent on or after 11 October 2006.  The claims amount to £22,044.92 in total.  

d.	Category Four: - Multi Agents whose payments including those of their Customers were credited to the Company’s accounts with NatWest on 11, 12 or 13 October 2006, and where, according to the tables and figures compiled by the Joint Liquidators, the amount of the Multi Agent’s claim (for himself and his Customers) match those credits and where the payment were made to the Multi Agent on or after 11 October 2006. The claims amount to £21,395.43 in total.

e.	Category Five: - Multi Agents whose payments including those of their Customers were credited to the Company’s Accounts with NatWest on or after 14 October 2006 and where the Customers claim to have made payments to their Agent on or after 11 October 2006 but where the total of the Customer payments claimed do not match the amount credited by the Multi Agent. The claims amount to £188,951.71 in total

f.	Category Six: - This category includes those in Category Five but in addition includes Multi Agents whose payments including those of their Customers were credited to the Company’s Accounts with NatWest on or after 14 October 2006 but where the Joint Liquidators’ staff have not been able to verify whether the payments were made by the Customer to the Multi Agent on or after 11 October 2006. The Sixth witness statement of Ms Thompson showed that there were 1079 Multi Agents comprised in Category Six.  They were owed £252,819.  However, as that witness statement explains, as a result of persons being moved into different categories, the amount of £252,819 is to be reduced by some £18,514.23. 

19.	As a result of debate at the hearing before me, it was considered that a further category should be considered:

a.	Category Five A: - Multi Agents whose payments including those of their Customers were credited to the Company’s Accounts with NatWest on 11, 12 or 13 October 2006 and where the Customers claim to have made payments to their Agent on or after 11 October 2006 but where the total of the Customer payments claimed do not match the amount credited by the Multi Agent. The claims amount to £171,594.92 in total.

20.	There is also a Residual Class which I describe below.  It comprises 416 Customers with a total maximum of potential trust claims of £61,222.18.

21.	HMRC and Ms Hall, as representative respondents, had now both consented (having taken advice from their legal advisers) to an order which provided for payments to those in Categories One, Two Three, Four, Five and Five A.  It was proposed that cheques will be sent to each Customer (in the cases of Category Five and Category Five A in the amounts claimed by the Customers) rather than the Agents for onward distribution as had been proposed at the hearing.  

22.	As well as the evidence before Mann J, I have available the results of the investigations of the Administrators and the Joint Liquidators.  I have also been provided, as requested, with an original Farepak Customer Payment Card.  These Cards were issued to each Customer.  On the front of the Card appeared the Agent’s name and Farepak number.  The Customer is advised as follows::

a.	“Please keep this card safe as it is your only receipt for all the payments you make.  Make sure your Agent signs it IN FULL each time you pay…”

23.	Inside were found the Customer’s details and space to record payment and the Agent’s signature.  On the back, it is recorded that “All orders are placed via your Agent”.  I share the view of Mann J about the role of the Agent.  The Agent was, I consider, the agent of Farepak.  The fact that he is referred to as “your Agent” [my emphasis] does not mean that he is the agent of the Customer.  Rather, the word “your” is used to identify the Agent concerned ie the Agent who deals with the relevant customer.  The phrase “your Agent” is being used in much the same way as it is possible to refer to “your bank manager” or “your doctor”.  Thus “Agent” means no more or less than “Farepak representative” in which context “your Agent [ie. Farepak representative]” makes perfectly good sense.

24.	On that basis, no Customer is able to assert a claim which depends on the payment into one of Farepak’s bank accounts, or the crediting of that amount, being made or effected at a later time than the payment by the Customer to the Agent since the payment to the Agent is legally payment to Farepak.

25.	Mann J explained why, in his view, no trust (including a Quistclose-type trust) was created over monies paid to Agents prior to the cessation of trade on 10 October 2006.  I agree with his analysis and conclusion.  He also explained why he considered that there was a strong argument that monies paid to Farepak (including for this purpose monies paid to Agents), at a time when Farepak has decided to cease trading and at a time when it had indicated that payments should not be received, would be held by Farepak on a constructive trust from the moment they were received.  Again, I agree with his analysis and conclusion.   He further explained why he considered that the declaration of trust should be rectified to cover the FFG Current Account.  Once again, I agree with his analysis and conclusions. 

26.	The matters which were as fully argued as they could be before Mann J in the time available have not been re-argued in front of me.  The Joint Liquidators see the strength of his reasoning.  The extra evidence now available does not, in their perception, weaken Mann J’s conclusions.  I share that perception: indeed, having seen the original Customer Payment Card (a complete copy of which was not available to Mann J), I can be more confident than he was that the Agent was the agent of Farepak and not of the Customer.

27.	In these circumstances, the Joint Liquidators seek an order permitting them to distribute funds to Customers in Categories One, Two, Three, Four, Five and Five A in the full amounts claimed by the relevant Agents and Customers save that in the case of a Customer of an Agent within Categories Five and Five A, the amount must not (a) be in excess of the amount paid by that Agent into Farepak’s bank accounts as recorded as having been made or (b) in excess of the total amount recorded as having been paid by that Agent’s Customers whichever is the lesser amount and where (b) is less than (a), payments will be reduced pro rata to the amount which each Customer claims to have paid the Agent.

28.	Understandably, the Joint Liquidators did not wish to themselves to incur, or to see others unnecessarily incur, further costs in resolving these matters.  Although the total sum of money involved is not insignificant, the actual sums which Customers might receive are not large.  Few Customers paid out more than £350 over the entire year; the dividend in the liquidation for unsecured creditors is likely to be small.  The difference in dividend depending on whether the claims now being addressed are allowed or disallowed is tiny.  Given the judgment of Mann J and the strength of the view he expressed (and with which I concur) the Joint Liquidators wished to distribute in accordance with those views without further ado.

29.	HMRC, as the single largest creditor, have been appointed to represent unsecured creditors.  They consented to the proposed distribution, recognising, I infer, that in all the circumstances this is the sensible course.  It is not difficult to see the sense in their position.  They recognise the strength of the argument on behalf of those in all of the Categories to whom it is proposed to make payment.  To challenge the claims of those Customers when their case is strong would make no sense when the additional dividend in the liquidation which might achieved is so small.  At the same time, HMRC is not prepared to see the claims of those Customers in Category Six who are not in Category Five or Five A being recognised.   

30.	Although not separately identified, there is another group of Customers namely Customers whose Agents paid money into Farepak’s account on 11, 12 or 13 October but where the Joint Liquidators’ the staff have again been unable to verify that payment by the Customer to the Agent was made on or after 11 October.  This group together with the residue of the Category Six are all persons who stand to have their trust claims rejected only because of their failure to provide the Joint Liquidators with satisfactory evidence of the date on which they paid their Agents.  Indeed, there is even a small group of  Sole Agents (ie Customers who are not agents at all but who dealt directly with Farepak) who have not indicated the date on which they made their last payment to Farepak.  I will refer to these groups these two groups and the residue of Category Six together as the “Residual Class” and will have more to say about that Class later.

31.	Ms Hall was appointed to represent Customers primarily to contend that a trust subsists over all monies paid by Customers into Farepak’s accounts.  As I have said, that point was fully argued before Mann J.  Ms Hall was represented by leading and junior counsel, Mr Trace QC and Mr Smith, who, so far as I can see, put all the arguments to the judge.  The argument has been rejected and can, in the analysis of Mann J, be seen to be weak to non-existent.  Ms Hall, if she wished to persist in the argument, could not expect the Joint Liquidators to underwrite her costs in advance.  It is entirely proper for her, on advice, to take the view that the proposed distribution is a proper one.  She has had her opportunity, at the expense of the assets of the administration, to argue the point and having lost is entitled to retire gracefully.

32.	It is, of course, for the Joint Liquidators to conduct the liquidation in a manner designed to achieve the best out-turn for creditors.  However, in the context of the particular issues raised in this application, they take on the same responsibilities as were cast on the Administrators by the representation order made by Briggs J.  In particular, it is for them to guard the interests of those Customers whose monies were paid into one of Farepak’s accounts on or after 11 October 2006, whose monies were paid to Farepak on or after 11 October 2006 or whose monies were paid to Farepak after close of business on 13 October 2006.  

33.	It is, in my judgment, proper for the Joint Liquidators to take the view that it is in the interests of those Customers who paid their Agents before 11 October 2006 now to accept that they now have no trust claim in respect of payments made before that date.  The claim is weak for the reasons explained by Mann J and accepted by me in the light of the contents of the Farepak Customer Card which I have referred to.  It is not the responsibility of the representative to take bad points, especially where the additional costs incurred will impact adversely on the assets distributable to unsecured creditors who would, in the absence of a trust, include those very Customers.

34.	The proposed distribution clearly reflects the interests of Customers within Categories One to Four whose claims will be met in full.  It also reflects the interests of Customer in Categories Five and Five A.  Although not every Customer in those Categories may receive what he or she claims, every Customer will receive something.  If he does not receive the full amount of his claim, he will at least receive a proportionate part of the total amount paid by his Agent in respect of him and other Customers (including the Agent himself) dealing through that Agent.  This cap reflects the refusal by HMRC (on behalf of unsecured creditors) to allow the full claim made by a Customer where the amount paid into Farepak’s account by the Agent is less.  Further, quite apart from that refusal, it is not easy to see how a Customer could assert a trust claim against the Joint Liquidators in relation to monies which had not actually been paid into one of Farepak’s accounts.  Even if the Agent had received more than he had paid over to Farepak, there would be no fund in the hands of the Joint Liquidators representing that excess and no reason why, in respect of that excess, the Customer should have anything other than a claim for a sum of money, provable like any other liability in the liquidation.  In these circumstances, the proposed distribution in satisfaction of the trust claims is a proper one for the Joint Liquidators to agree in the interests of Categories Five and Five A.

35.	That leaves the Residual Class to be considered.  As I have already said, it is perfectly proper for the Joint Administrators and now the Joint Liquidators as the representatives of various persons pursuant to the Order of Briggs J, to accept that no trust interest subsists in favour of Customers who made their last payment to their Agent before 11 October.  The compromise reached with HMRC and Ms Hall has resulted in the trust interests of Customers who paid their Agents on or after 11 October 2006 being recognised in full.  There is, however, a difficulty in relation to the Residual Class: it is not known whether they have trust interests because it is not known whether they paid their Agent before, on or after 11 October 2006.  I do not consider that the representation order requires the Joint Liquidators to represent the interests of a member of the class in the sense of arguing  the factual issue of whether he or she in fact made a payment to the Agent on or after that date.  Although the responsibility under the representation order was to argue that a trust subsisted in favour of a class which included Customers whose payments were received into the bank accounts on or after that date, it is clear that this was for the purposes of establishing the principles to be applied.  The Joint Liquidators have achieved that objective (assuming that HMRC and Ms Hall accept the modified proposals which I will come to in a moment) by establishing a trust interest for all those persons where payment was made to the Agent on or after 11 October 2006 (or to Farepak where a Multi-Agent was not involved).  It is no part of the Joint Liquidators’ function to establish on the facts whether a particular Customer did make a payment on or after that date.  That is a matter for each individual Customer: it is a matter of fact unique to him or her and in relation to which a representation order would be wholly inappropriate.

36.	It follows that no individual member of the Residual Class is represented before the Court on this factual issue (although they can be bound, by the representation order, to the issue of principle, namely the cut-off date for trust claims of 11 October 2006 in relation to payments to Agents). Nor has such a member been asked by the Court to make representations or to appear.  I have been concerned, therefore, to ensure that the interests of the Residual Class are appropriately recognised before authorising a distribution of assets by the Joint Liquidators.  If this were a case where a small number of individuals was concerned, where each individual, or at least some of them, stood to receive a significant payment and where the costs of their attendance or representation were proportionate to the sum involved,  the conventional and correct course would be to give them notice of the proposed distribution and to invite representations.

37.	Unfortunately, the present case is none of those.  There are over 400 individuals involved; although the total sum is not, at just over £61,000, insignificant it is not large; the claims of most individuals are less than £100 and the largest is only £1,000; and the costs involved in a conventional approach would be disproportionate to the sums at stake since the position of each Customer is, as I have said, unique to him or her and requires separate investigation.  The Joint Administrators and after them the Joint Liquidators have already carried out detailed, thorough and, inevitably, expensive enquiries both to see if any more could be discovered about the relationship between Customers and Agents in the context of agency, and also to ascertain what monies were paid by Customers to Agents and when.  Customers have been afforded every opportunity to present their evidence about payment in order to enable the Joint Liquidators and, ultimately, the Court to establish whether or not payment was made before or after 11 October 2006.  The conventional approach just mentioned would, they consider, inevitably result in further lengthy and costly correspondence, quite probably raising matters which have nothing to do with this particular aspect of the liquidation.  Moreover, on the conventional approach, Customers would, of course, have to be given details of the order sought and the significance of the 11 October 2006.  The Joint Liquidators are concerned about this because of the fear that Customers might shape their evidence with a view to matching the date of their last payment to 11 October 2006.  I would add that this is not to say that Customers would be dishonest (although in some cases they might be) so much as to say that it is all too easy to persuade oneself of a fact which is one’s favour.  In any event, to be able to put the matter to these Customers in an entirely neutral way is, they consider, far preferable as it should elicit a response which is not influenced by the outcome.

38.	Ms Hilliard QC, at a further hearing on 31 July 2009, invited me to deal with the matter in this way.  The Joint Liquidators will write a further letter to each member of the Residual Class asking them to specify the last date on which they made a payment to the Agent or, in the case of a Sole Agent, to Farepak.  The letter will advise the recipient of the importance of a reply to enable the Joint Liquidators to assess the extent of his or her claim and that the failure to reply could have an adverse effect on the amount of any recovery.  There being no independent way to check the accuracy of the reply, the Joint Liquidators are likely in practice to take the reply at face value and, accordingly treat a member of the Residual Class who replies giving a date on or after 11 October 2006 as entitled to a trust claim and those specifying an earlier date as having no trust claim.  Those who do not reply will be treated as not having established their trust claim.  The Joint Liquidators are to be authorised to deal with the monies in the bank account on the footing that these Customers do not have a trust claim and that the monies held by them, save as distributed to Customers in Categories One to Six to the extent authorised by the order, are to be transferred to the Joint Liquidators’ bank account and used for the purposes of the liquidation on the footing that no other Customers have a trust claim.

39.	The Joint Liquidators had not by the time of the hearing on 31 July 2009 approached HMRC or Ms Hall about these proposals.  This is for two closely related reasons.  First, they had already obtained changes to the form of order originally agreed and feared irritation or worse if a further approach were made.  Secondly, they saw no merit in making an approach unless they knew that the Court would be willing to sanction the approach they wished to take; indeed, with that sanction, they would feel it more likely that HMRC and Ms Hall would agree.  Accordingly, I was invited to make an order conditional in its operation upon the receipt of the consent of HMRC and Ms Hall.

40.	In the very unusual circumstances of this case, I stated at the hearing on 31 July 2009 that I approved that approach and made an order accordingly.  The approach which I adopted was an unconventional approach; it did, however, achieve the following:

a.	It addressed the concerns which I had about the Residual Class being shut out without any further opportunity to demonstrate when the last payment was made.
b.	The way in which the Residual Class was to be approached eliminated any concern that evidence would be produced with an eye to the result.
c.	It controlled the costs, removing a serious risk, indeed a likelihood to my mind, of a disproportionate amount of expense falling on the fund.
d.	It achieved, in my judgment, a fair balance between the interests of the Residual Class and the ordinary creditors.

41.	It was in the light of those factors that I made the order which I did.  I should add that I also made orders sealing certain exhibits contained in the exhibit which are not to be made publicly available without a further order of the court.  These exhibits contain confidential information which it is not appropriate to make publicly available.  

42.	I indicated that I would not deliver a judgment until the time for potential members of the Residual Class to make claims had passed.  HMRC and Ms Thompson consented to the terms of the Order well before the time for doing so laid down in the Order expired; it therefore became unconditional.  The date for responses to the letters which I have referred to above and which the Order contemplated would be sent was 10 September 2009.  I am told that 55 claimants made claims which brought them within the Residual Class; payments have been or will be despatched to those claimants accordingly.   I have been provided with this information by a letter dated 24 September 2009 from Addleshaw Goddard, the solicitors acting for the Joint Liquidators.

43.	In these circumstances, I give this judgment so that the many individuals who have suffered as a result of the collapse of Farepak may now know of and understand the Order which I made and my reasons for making it.