Case No: 21986/22199 of 2009
Neutral Citation Number: [2010] EWHC 788 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT
Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 19th March 2010

Before :

SIR JOHN LINDSAY
(Sitting as a Judge of the High Court)
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Between :

	IN THE MATTER OF ENERGY HOLDINGS (No. 3) LIMITED (IN LIQUIDATION)
A N D
IN THE MATTER OF THE INSOLVENCY ACT 1986

GOLD FIELDS MINING LLC	

Applicant	
	- and -		
	(1)  JAMES ROBERT TUCKER
(2)  JEREMY SPRATT
	(the joint Supervisors of Energy Holdings (No. 3)
	Limited (in liquidation)	

Respondents	
	AND BETWEEN
(1)  JAMES ROBERT TUCKER
(2)  JEREMY SPRATT
	(the joint Supervisors of Energy Holdings (No. 3)
	Limited (in liquidation)	

Applicants	
	- and -		
	GOLD FIELDS MINING LLC	Respondent	

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A P P E A R A N C E S

MR. P. ARDEN QC  and  MR. T SMITH  (instructed by Barlow Lyde & Gilbert LLP) appeared on behalf of the Joint Supervisors of Energy Holdings (No.3) Limited (in Liquidation)).

MR. S. DAVIES QC  (instructed by Brown Rudnick LLP) appeared on behalf of Gold Fields Mining LLC.
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Judgment
Sir John Lindsay : 
1.	I have before me two originating applications: each concerns the same parties, namely Gold Fields Mining LLC, a corporation incorporated in Delaware USA, on one side, and two individuals, Messrs J R Tucker and Mr. J Spratt, both of KPMG LLP of London EC4 on the other.  The first in time was issued by Gold Fields Mining LLC (“GFM”) on 17th December 2009 and there the applicant is GFM and the two individuals are the respondents in their capacity as joint Supervisors of a Company Voluntary Arrangement (“CVA”) relating to Energy Holdings No.3 Ltd (“EH3”).  The second in time of the two applications was issued by the two individuals on 23rd December 2009 in their capacity not only as joint Supervisors but also as joint Liquidators of EH3, which is in liquidation in England.  The relief claimed in the first application is broadly within the relief claimed in the second, so that both can be and have been conveniently heard together.  
2.	Before I explain the relief which is claimed I shall need to say something of the background to the applications and then turn to a chronology.  EH3, now in liquidation in England, was (and is) part of a group of companies called the TXU Group.  It has been in liquidation since 2003.  Its Liquidators are and, I think, were from the outset, Messrs Tucker and Spratt who, in that capacity of theirs I shall call “the Liquidators”.  Along with 15 other companies in that group EH3 became the subject of a single CVA proposed for each of the 16 companies all together in 2005.  The CVA was prepared by the Liquidators, or the Liquidators with others, and after appropriate creditors’ meetings EH3’s CVA took effect on and from 31st March 2005.  The CVA is far from short, some 190-plus pages, and not without complications.  Messrs Tucker and Spratt are, and, I think, always have been since its outset, the joint Supervisors of the EH3 CVA and in that capacity I shall call them “the Supervisors”.
3.	The field of operations in which GFM and companies related to it and EH3 and companies related to it have operated have included mining, and lead mining in particular, in the United States of America - operations notorious for the possibility of their creating long-term and late emerging environmental liabilities.  For perhaps that reason, or conceivably independent of it, there have been numerous takeovers, changes of names and assignments the features of which have included various indemnities of an elaborate “pass the parcel” character where, the opposite of the game, the object has been to be not found holding a poison parcel when the music might stop.  When the music stopped - or at least when the relevant music here stopped - the parcel of liability was found to be in the hands of a company I shall call “Blue Tee”.  Blue Tee has sought to pass that liability on to others, including to GFM and GFM’s parent or affiliate, Peabody.  The two originating applications are concerned with the processes by which it is to be decided whether some environmental liability can be passed on by GFM to EH3.  The sums involved are very large.  
4.	The rival processes may very broadly be labelled as the CVA on the one hand and Delaware on the other.  I shall look first to the CVA, many of the provisions of which are central to my decision, but I shall begin by saying that as at the date of the CVA, 31st March 2005, GFM had not raised any material environmental claim or claims based on any indemnity as against EH3.  That did not come about until the lodging by GFM of a claim in the shape required by the CVA on 9th July 2007.  Certainly, the CVA makes no exceptional relevant provisions for the type of claim which ultimately GFM raised against EH3 in July 2007.  
5.	To go to the CVA, I first make some general observations as this judgment may fall to be considered outside the United Kingdom.  CVAs are regulated by the Insolvency Act 1986 (As Amended) (see ss.1-7(b)).  The Liquidator of a company may propose that it should be regulated by a CVA (s.1(3)(b)).  He summonses meetings of the company and of its creditors (s.3(2)); the creditors then decide whether or not to approve it, with or without modifications (s.4(1)).  The chairman of the meeting reports the result to court (s.4(6)); the CVA is then approved - if that is the wish of the meetings - and takes effect generally without any further rôle to be played by the court (s.4A(2)).  The CVA then binds those who had been entitled to vote at the creditors’ meetings whether or not they did vote (s.5(2)(5), and whether or not the creditor concerned had notice of the CVA.  There are challenge possibilities open (s.6) but they were not used here.  So the joint Supervisors, namely Messrs. Tucker and Spratt, became such officers (s.7(2)).   A creditor dissatisfied with any act or omission by a Supervisor can go to court to obtain directions as to what the Supervisor should do (s.7(3)).  The originating application by GFM includes a reliance on s.7(3).
6.	A proposed CVA prepared by those familiar with CVAs is, of course, sought to be couched in terms which the proposers expect will attract support from creditors.  There is little point in preparing a CVA which can be seen to be likely not to attract support and a familiar feature in CVAs in complicated cases such as those here in the TXU Group is a proposal that claims against the companies concerned shall be ruled upon not by the ordinary litigation processes of civil litigation (often said to be lengthy and expensive and, in England, as giving rise to a risk of liability not only for one’s own costs but for the costs of others) but by a prescribed robust claims procedure as set out in the particular CVA concerned.
7.	It is often the case that a creditor, who will sometimes in his accounts have already written down the debt to him by an insolvent CVA company, will rather subject his claims to the arbitrament of an ad hoc independent tribunal of, say, lawyers or accountants than to a court process and so will prefer a process without the full panoply of disclosure, pleadings, cross-examination and so on that civil court proceedings can entail and which may delay ultimate receipt and involve expense.  Creditors not uncommonly prefer, say, 12p in the £ in May of one year and at no unforeseen risk as to costs to, say, possibly 60p in the August two years later, with that latter being determined in court proceedings that might involve possibly paying some other side’s costs.   Particularly some such robust process is likely to attract the support of creditors where it can be seen that all of them within appropriate classes will be made subject to the same determining process so that none can steal a march on the others and none is set at an advantage which the others cannot obtain.
8.	With that I turn to the CVA itself, to many of the proposals of which I shall need to draw attention.  Section 1, clause 1.2 says:-
“The CVAs, if implemented, will provide: (a) for compromises of disputed matters between some of the CVA Companies and between some of the CVA Companies and some of their creditors; (b) for distribution of the assets of the CVA Companies among their CVA Creditors; and (c) for distribution to certain CVA Creditors of sums payable directly to them as a result of a settlement with TXU Corp.”
	Clause 2.3 says:- 

“If a company voluntary arrangement is approved, it binds all creditors of the company who were entitled to vote at the meeting (whether or not they were present or represented at it) or would have been so entitled had they received notice of the meeting.”
	That a relatively early outcome was held out as a likely attraction can be seen in clause 5.1, where the third distribution under the CVA was foreseen as being for April or May 2006, although very fairly the proposer said:-

“Creditors should note that this is an indicative timetable only and that it may be lengthened due to various circumstances.”
9.	The Liquidators showed what their approach would be; clause 3 says: “General Approach of the Officeholders” - a term which referred to the Liquidators in their capacity as such and as proposers of the CVA:-
“3.1 The Officeholders have sought to propose company voluntary arrangements which are fair and reasonable to the CVA Creditors of each CVA Company as a whole and which, in their view, will command the approval of the necessary statutory majority of CVA Creditors.  As part of this process the Officeholders have facilitated and guided negotiations between the Existing Creditors' Committees, various representatives of each of the principal groups of creditors, TXU Corp and the administrators and Liquidators of the TXUEG Group companies.
3.2 The Officeholders of the CVA Companies have jointly taken legal advice, including advice from leading counsel, on the Proposal.  In addition, particular Officeholders of EGO BV and EH3 have obtained their own legal advice on certain aspects of the Proposal. The Officeholders believe that the complex interlocking package of compromises contained in the Proposal which resulted from the process referred to in paragraph 3.1 above represents a fair and reasonable balance between the interests of each of the CVA Companies and is fair and reasonable for the CVA Creditors of each of those CVA Companies.” 
	In clause 3.3 there is a reference to matters which were compromised in the CVAs which would otherwise need to be resolved through litigation and it is there suggested, in effect, that if there were to be litigation there would be substantial delays and increased costs in making distributions to CVA creditors.
10.	Already a great deal of work had been undertaken by the proposers of the scheme, the Liquidators. At clause 10.1 one finds:-
“When the Officeholders were appointed to the CVA Companies they found that the books and records of the CVA Companies relating to Inter-Company Indebtedness were incomplete. The Officeholders, together with various former directors and officers of the CVA Companies, have spent two years reconstructing the records in relation to Inter-Company Indebtedness in order to ascertain and verify the balances. The Officeholders consider that they have now done everything which they can practicably do at a reasonable cost in order to ascertain those balances and they consider it fair and reasonable that the balances for Inter-Company Indebtedness are those set out in Annex 14.”
11.	The tasks falling to the Supervisors, should the CVA be approved, (as, of course, it was) can be seen under Part G, under the heading: “Management of the CVAS”.  At 1.2 one finds: “The CVA Supervisors will carry out the following functions for their respective CVA Companies”; they are there set out I do not need to read all of them, but it is foreseen that CVA creditors will be invited to submit a claim form, and at 1.2 (b):-
“the CVA Supervisors will determine whether the CVA Claims submitted by Claim Forms are Allowed Claims or Disputed Claims.  In doing so the CVA Supervisors will be entitled to call for further information or documentation in relation to the CVA Claims.  The CVA Supervisors will admit the CVA Claims set out in Annex 5 at the amounts set out in that Annex.”
	That last sentence is not particularly relevant for immediate purposes though it does indicate a particular provision being made for particular claims.  At (c):-

“the CVA Supervisors will notify CVA Creditors if their CVA Claims are Disputed Claims and, if applicable, carry out any functions required under the Dispute Resolution Procedure described in part G, paragraph 4.6 and Annex 9. The CVA Supervisors will also determine whether any CVA Claims submitted after the Claims Date should rank for distribution.”
12.	Meanwhile the Liquidators had the task of getting in assets - heading 2: 
“2.  The Continuing Role of the Officeholders”
2.1 The Officeholders of each CVA Company will continue to perform the functions required of them pursuant to the Insolvency Act and the Insolvency Rules and act in accordance with their powers, other than to the extent that such powers or functions would conflict with the powers and functions of the CVA Supervisors of the relevant CVA Company.
2.2 Accordingly, other than to the extent required by the arrangements described in this part G, it will not be the duty of the CVA Supervisors to oversee the business and affairs of the relevant CVA Company and the CVA Supervisors shall have no responsibilities in relation to the conduct of the affairs of the relevant CVA Company or in relation to any matters other than those expressly set out in this Proposal.
2.3 The Officeholders of each CVA Company will continue to control all of the assets of the CVA Company, including any Excluded Assets. The assets under the control of the Officeholders (other than the Excluded Assets) will be used for the purposes of each CVA Company's administration or liquidation and shall be realised into cash as soon as practicable. The cash once realised will be available for distribution to CVA Creditors in the manner described in part G, paragraph 4.”
	As for that distribution para. 4, one finds under the heading “Distribution”:-

“4.1  A CVA Creditor's entitlement to a Distribution in respect of his CVA Claim will be determined on the basis set out below.”
	and then that is explained a little further.  Then under the heading of “Claims Date”:-

“4.2  The Claims Date in respect of each CVA is the date falling 45 days after the CVAs have been approved at the Creditors' Meetings and the Members’ Meetings.
4.3  In order for a CVA Creditor who has lodged a Claim Form after the Claims Date to be entitled to Distributions, the relevant CVA Supervisors or the Court must determine that the failure to lodge the Claim Form earlier did not result from a wilful default or lack of reasonable diligence on the part of the CVA Creditor.”
	I mention that because that time-bar and the question of wilful default or lack of reasonable diligence plays a part in the chronology.
13.	Then under the heading of “Allowed Claims”:-
“4.4  For the purposes of adjudicating the CVA Claims the CVA Supervisor will apply the Rules listed in Annex 8 with the amendments and provisos set out in that Annex as if:
(a) 	the relevant CVA Company was being wound up voluntarily;
(b) 	the Claim Forms or other information provided by a CVA Creditor to the relevant Officeholders in response to this Proposal were proofs of debt;
(c) 	the CVA Supervisors were the Liquidators of the relevant CVA Company; and  
(d) 	the references to the date on which a company went into liquidation are to  19th November, 2002.
The terms of Clauses 27 (Rights to Interest), 28 (Set-off) and 30 (Disputed Claims) of the CVAs will also be applied.
4.5  CVA Claims will only rank for Distributions to the extent they are Allowed Claims. Any CVA Claim other than an Allowed Claim will be treated as a Disputed Claim (which would include any claim that has not  been admitted by the CVA Supervisors irrespective of whether the CVA Supervisors have rejected the claim or not).”
	So that introduces an hypothesis to which I will later refer.  Clause 4.6 under the heading “Disputed Claims” is important:-

“4.6  If the CVA Supervisor rejects a CVA Claim in whole or in part, he shall prepare a written statement of his reasons for doing so and send it as soon as practicable to the CVA Creditor. If a CVA Creditor is dissatisfied with a CVA Supervisor's decision as to the status of his CVA Claim, he must notify the CVA Supervisor within 21 days of receiving the CVA Supervisor's written statement of reasons, of his intention to invoke either of the Dispute Resolution Procedures described in Annex 9. If the CVA Creditor fails to notify the CVA Supervisor within this 21 day period, the CVA Claim will be treated as being rejected in whole or part (as applicable) or admitted for the value of the CVA Supervisor's estimate.”
	As we shall find, there has yet been no written statement as to rejection of GFM’s claim, which is accepted to be a CVA claim.  Where a claim is not admitted, but not in terms rejected, then the Supervisors have to reserve against the possibility that the claim could become accepted.   

	Thus under the heading “Reserves”:-

“4.7 The Officeholders of each CVA Company will retain appropriate reserves to enable the CVA Supervisor of that CVA Company to pay a Distribution on each Disputed Claim to the extent that the Disputed Claim becomes an Allowed Claim.”
	There are further provisions there that I do not need to look at.
14.	The CVA created a moratorium as is common.  It is found at Part H, Clause 3:-
“3.1  While the CVAs remain in force and following the termination of the CVAs as a result of all of the Assets being distributed, no steps or proceedings will be capable of being brought or continued by a CVA Creditor against any of the CVA Companies or their property (whether by way of demand, legal proceedings, alternative determination process (including arbitration or an expert determination process), the levying of distress, execution of judgment or otherwise) either:
(a) for the purpose of obtaining payment of a CVA Liability; or
(b) for the purpose of placing a CVA Company which is currently in administration into liquidation or any insolvency, reconstruction, bankruptcy or analogous foreign proceeding.”
	But, of course, 3.2 would not affect the enforcement of CVA creditors’ rights as they arose under the CVA itself.  It was provided that this contractual moratorium should not limit s.11 of the Insolvency Act or Schedule B(1) para.43 of the Insolvency Act.
15.	GFM, appearing by Mr. Stephen Davies QC, points out, correctly in my view, that as a result of clause 3.1 his client has not been able to litigate its claim against EH3 in the courts in England since 31st March 2005 or, perhaps as would be more relevant here, ever since it first formulated its claim on 9th July 2007.  
16.	Of course, it can sometimes be that circumstances that emerge later are unforeseen and that a CVA proposal thought to be convenient at one point is later found to be inconvenient or unjust, so a power to modify is sometimes given, and it was given here in clause 4 of Part H: “Modification to the CVAS:  “4.1  The Officeholders …” and, of course, as I mentioned, that means the Liquidators:-
“… will have the power at any time after the Implementation Date, if they consider it expedient to do so and in the best interests of the CVA Creditors, to modify the terms of any of the CVAs provided the modifications would not, in the opinion of the relevant Officeholders, result in a reduction of more than 0.5 pence in the pound in the dividend payable to CVA Creditors of a CVA Company. This power shall be exercisable after consultation with the relevant CVA Creditors' Committee (if any) but without reference to the CVA Creditors. The Officeholders will inform the CVA Creditors of any modifications and those modifications will be binding on the CVA Creditors and the CVA Supervisors and the relevant CVA will be modified accordingly”.
	At 4.3 one finds that the court has a power to modify:-

“4.3 At any time following the decision referred to in section 4 of the Insolvency Act approving a CVA, the Officeholders of a CVA Company may, with the leave of the Court, make any modification which they consider to be in the best interests of that CVA Company.”
	There is nothing in front of me that suggests there has been any consultation of the nature referred to in 4.1 and the route mentioned in 4.3, which I have just read, has not been attempted.  The fact that there has been no attempt to modify the CVA underlines, as it seems to me, that the proposals as they stand, if they regulate what is to be done, are intended to provide a complete code to the extent that their language suggests.
17.	Then comes Part II of the CVA which trumps those provisions at Part I if a conflict between them arises.  I have not had any attention drawn to any particular and relevant conflict between Part I and Part II.  At para. 3.1 of Section 2 of Part I one finds that the provisions which I read earlier as to moratorium are again provided for.  At 6.1 one finds the moratorium again set out in very full terms; again, I have already foreshadowed the nature of the moratorium, I do not think I need to read that.  I am not going to repeat the provisions where Part II merely echoes those to which I have already referred in Part I.  There is then Part III and I look at provision 18.11 which says:-
“For the avoidance of doubt, the CVA Supervisors of a CVA Company may apply to the Court for the purpose of obtaining directions in accordance with the Insolvency Act without reference to CVA Creditors.”
	As I have said, that provision is invoked by the Supervisors in their originating application.  Under the heading “Specific Duties and Powers of the CVA Creditors, Part III, clause 19 begins: “The CVA Supervisors of each company shall:” and then I go to (b):-

“(b) have sole responsibility for:
(i) 	determining whether any CVA Claim is an Allowed Claim;
(ii) 	notifying CVA Creditors if their CVA Claims are Disputed Claims or have been rejected in whole or in part and the reasons for such rejection;
(iii) the conduct of Disputed Claims pursuant to the Dispute Resolution Procedure or otherwise; and
(iv) determining whether or not any CVA Claim submitted after the Claims Date should be an  Allowed Claim;”
	I note the reference to “sole responsibility” and determining whether “any” claim is an allowed claim.
18.	“Part IV  Adjudication of CVA Claims” begins with a provision called “Submission of CVA Claims” at clause 23:-
“23.1  Distributions under the CVA shall only be payable on CVA claims to the extent that such CVA claims are allowed claims.  Any CVA claim which is not an allowed claim shall be treated as a disputed claim.
23.2  Disputes in relation to CVA claims or purported CVA claims shall be determined in accordance with the Dispute Resolution Procedure, the amount of any disputed claim which is determined pursuant to the Dispute Resolution Procedure or is agreed by the CVA Supervisors will become an allowed claim.”
	I note that there “shall be” is mandatory and no exception is provided for.  That special provisions could have been made for particular classes of CVA  creditors, or for particular classes of CVA claims is plain, and some do appear at clause 23.4 where, for some creditors, there was to be a deemed claim form submitted; but, as I have mentioned, no special provisions were created for environmental liabilities of any description.
19.	The hypothesis I referred to earlier was repeated at clause 24.1 but one has, in effect, to read in something such as “mutatis mutandis” as in some respects the provisions of the CVA differ from those in liquidations, but I do not think it necessary to explore the differences save to say, as is pointed out by Mr. Peter Arden QC (who, with Mr. Tom Smith, appears on behalf of the Liquidators and Supervisors), that an adjudication of a claim under the CVA process is more final than a corresponding decision in a liquidation where (see Insolvency Rule 4.85) a proof, for example, even though admitted can later be expunged or reduced.  That the provisions of the CVA are intended to achieve finality as early as possible is plain. 
20.	Provisions as to set off if the company owes money to a CVA creditor are found at clause 28, but set off is far from automatic.
21.	Under the heading “Disputed Claims” at Part IV, clause 30, 30.1, amplifying the provisions I have read earlier, says:-
“If a CVA Creditor or claimant is dissatisfied with the CVA Supervisors’ decision with respect to his CVA Claim or with the CVA Supervisors’ estimate, he may give notice to the CVA Supervisors of the relevant CVA Company of his intention to apply either paragraphs (A) or (B) of the Dispute Resolution Procedure to determine the existence or amount of the CVA Claim. Such notice shall be given within 21 days of the CVA Creditor or claimant receiving a written statement of the CVA Supervisors' reasons for rejection of the CVA Claim in whole or in part or for making his estimate and any revision to it. If no such notice is given within 21 days, such CVA Claim will be treated as being wholly disallowed or admitted for the amount determined or estimated by the CVA Supervisors.”
	That amplifies rather than differs from the earlier provisions which I have already read on the same subject.  Then:-

	“30.2 The provisions of Annex 9 (Dispute Resolution Procedure) shall apply as if set out in full in this Clause.”
	Again, one has to note that “shall apply” is a mandatory provision.
22.	In Annex 1 there are definitions which I hope will make more sense of some of the passages I have already read, thus: 
“Allowed Claim” means a CVA Claim which is agreed in accordance with Clause 24. 1 of the CVAs or determined in accordance with the Dispute Resolution Procedure.” 

“Claim” means, in connection with the business or affairs of any member of the TXUEL Group or the TXUEG Group, any or all claims and applications (whether they are or may become vested in any member of the TXUEL Group ...)”

	then there is a long passage I need not read but then continuing:-

“... whether or not it arises under English law, Dutch law or the law of any other jurisdiction, whether or not it arises in England or any other jurisdiction and whether or not it exists in law at the date of the Settlement Agreement ...”
	A CVA claim is defined as:- 

“any claim against a CVA Company in respect of a CVA liability.”
“CVA Liability” means any Liability of a CVA Company which would be provable under Rule 12.3 against that CVA Company if it were to be placed in compulsory liquidation on its Petition Date ...”
“Disputed Claim means any CVA Claim which is not an Allowed Claim.”
23.	Annex 8 is headed: “Principles for Agreeing Allowed Claims For Distribution Purposes” and begins-
“The Insolvency Rules and the amendments and provisos to be applied are set out below ...”
	Under 4.82 it says:-

“admission and rejection of proofs;
(1) [Admission] A proof may be admitted for dividend either for the whole amount claimed by the creditor, or for part of that amount.
(2) [Rejection] If the Liquidator rejects a proof in whole or in part, he shall prepare a written statement of his reasons for doing so, and send it forthwith to the creditor.”
	Again, one has to have in mind some provision such as mutatatis mutandis as it is the Supervisor not the Liquidator who, under the Adjudication Process will be determining whether a claim form is to be admitted or rejected.
24.	As for quantum, similarly that is a matter left to the Liquidators as it says, but, under the hypothesis, it will fall to the Supervisors to estimate the provision as it is found at:-
“4.86   estimate of quantum
(1) [Estimating value of debts etc.] The Liquidator shall estimate the value of any debt which, by reason of its being subject to any contingency or for any other reason, does not bear a certain value; and he may revise any estimate previously made, if he thinks fit by reference to any change of circumstances or to information becoming available to him.”
25.	Annex 9 is headed: “Dispute Resolution Procedure”:-
“If a CVA Creditor's CVA Claim is rejected in whole or in part by the CVA Supervisor, any dispute as to the existence or proper value of the CYA Creditor's CVA Claim shall be resolved at the CVA Creditor's sole election, by the CVA Creditor commencing within 21 days of receipt of notification of the CVA Supervisor's decision (to be determined in accordance with Clause 41.3 of the CVAs) either (A) proceedings issued in the Court by the CVA Creditor in accordance with paragraph A below; or (B) expert determination in accordance with the procedure summarised in paragraph B below.”
	Then one sees:-

“Paragraph A
The CVA Creditor shall appeal the rejection of its CVA Claim and seek the resolution of the existence or proper value of its CVA Claim by means of proceedings issued in the Companies Court of the Chancery Division of England and Wales as if the CVA Claim were an appeal of a Liquidator’s decision under Rule 4.83.
Paragraph B
(i)  There shall be a claims panel of six persons. The six persons shall be three practising lawyers (either solicitors or barristers) of at least ten years' standing and three accountants who shall be Fellows of the Institute of Chartered Accountants in England and Wales.
(ii)  Members of the claims panel shall be appointed by the LCIA in consultation (where necessary) with the President for the time being of the Institute of Chartered Accountants in England and Wales.”
	Then there is a provision about appointing substitutes which I do not need to look at.

“(iv) The claims tribunal shall consist of one or of three persons chosen from the claims panel.
(v)  The decision on the number of members of any claims tribunal shall be by agreement between the CVA Creditor and the CVA Supervisor.  Where the parties do not agree on the number of members.  The claims tribunal shall consist of three persons.
(vi)  The claims tribunal shall be comprised as follows:-
(a) 	on all claims Tribunals with one member that member shall be either a solicitor or a barrister; and
(b) 	all claims tribunals of three members shall be chaired by either a solicitor or a barrister. The majority decision of the claims tribunal shall constitute its determination. If there is no majority decision then the Chairman’s decision shall constitute the determination.”
	I am not entirely sure how that last feature was intended to work, given a tribunal of either one or three, but there we are.  
26.	Mr. Davies emphasises the words “at the CVA creditors’ sole election” in the opening paragraph and says, with force, that that important right cannot be taken from a CVA creditor so long as that creditor has acted within the prescribed 21 days.  I have not understood Mr. Arden to say that  that sole right to make an election can be denied to a CVA creditor where his claim is rejected in whole or in part and there is no mechanism, other than modification of the CVA, which has not been attempted, by which the right could be denied or undone.  If route A is chosen then it is the English Court and no other court that is to be given the task.  If route B is chosen then I have read the provisions which will then lead to the decision being made by a claims tribunal composed out of members of the Claims Panel.
27.	I need to set out how the claims tribunal is contemplated as working:-
“9.  The claims tribunal shall meet in London and its proceedings shall be in English.
10.  There shall be no formal hearing.
11.  Each claims tribunal shall determine its own procedure save that the CVA Creditor and the relevant CVA Company shall have the right to make written submissions to the “claims tribunal”. The claims tribunal shall be entitled to rely for the purposes of its determinations on the advice of Queen’s Counsel or technical expert advisers instructed by it on any aspect of its work.”
	There is a provision at 12 which I do not need to look at.  13 may be of some importance:-

“13.  The claims tribunal shall have no general power to award costs or interest. The costs of the parties, the claims tribunal and the appointing body shall be borne equally by the relevant CVA Company and the CVA Creditor save that the claims tribunal can direct one party to pay the remuneration and costs, charges and expenses of another party and/or the claims tribunal and appointing body if, in the opinion of the claims tribunal, any such party has made a claim, relied on a defence or otherwise conducted himself in relation to the dispute resolution in a manner which is frivolous, vexatious or had no reasonable prospect of success.
14.  The claims tribunal shall determine all matters in dispute as to the existence or proper value of the CVA Creditor's CVA Claim between the CVA Creditor and the relevant CVA Company. The determination of the claims tribunal on each and every issue before it shall be final and binding on the CVA Supervisor, the CVA Creditor, the relevant CVA Company and its Administrators or Liquidators. There shall be no right of appeal from the determination of the claims tribunal and there shall be no right to make any claim against members of the claims tribunal individually or collectively. For the avoidance of doubt, the exclusion of any right of appeal shall operate only to the extent permitted by law.
15.  The claims tribunal shall act as an expert and not as arbitrator and the law relating to arbitrations shall not apply.”
	So a potentially robust route to an early finality is set out, one with relatively foreseeable costs, absent unreasonable conduct, though it has to be added that if the claims tribunal feels it has to adjourn, for example, or require expert advice, for example as to foreign law, it could do so and its conclusions would only be capable of challenge to the very limited extent which the authorities show that an expert’s decision which is indicated as intended to be final and binding can be overturned or  varied.  Those are the provisions, a very small proportion of the total CVA, which have been drawn to my attention as relevant to the originating applications before me.
28.	As I have said, GFM lodged a claim form against EH3 on 9th July 2007.  It is a complex claim and one which could amount to over $200 million.  It asserts that GFM is entitled to rely on an indemnity given by EH3, and, looking simply at the language of that indemnity, one can see a case for saying that EH3 is, indeed, liable under it.  Another indemnity called the ‘Peabody’ indemnity is argued by EH3 to come to EH3’s aid but the language of the two of them is not identical and the position could be such that prima facie one could have a liability by EH3 under the EH3 indemnity which was uncovered by the Peabody Indemnity as a counter-indemnity in EH3’s favour.  Fortunately, at this juncture I am not required to decide, and do not decide, whether the GFM claim is good or bad, nor would that issue involve only or primarily English Law.  But, as I have said, it is accepted in argument that the GFM claim is a CVA claim within the meaning of the CVA (see the definitions in Annex 1 to which I have referred) and that it is not an “Allowed claim” within that definition.  In a sense it is thus, without more, a “Disputed claim” within the definitions given.  That would arise if a full literality were given to the definitions because, absent the creditors’ agreement, every claim lodged would immediately become a “Disputed claim” as defined and could forthwith then be taken to the dispute resolution process.  That cannot have been intended.  The Supervisors must have been intended to be given a reasonable period within which to make their adjudication upon whether to accept or reject the claim.  What is reasonable, of course, cannot be fixed without reference not merely to the lapse of time, but to material acts and omissions over whatever is the relevant period of time.
29.	On 26th July 2007, Mr. Milsom of KPMG (and Mr. Milsom’s name recurs throughout the papers) asked for the documents referred to in the claim form and for an explanation of the claim.  He writes:-
“In addition, please provide an explanation as to how the sums referred to arise, with specific reference as to which conditions of the documents apply.”
30.	Those documents were supplied in August 2007 but Messrs Allen & Overy, then acting for the joint Supervisors, took the view that the claim form was out of time.  They wrote:-
“The claim form was submitted outside the time limits prescribed by the CVA and therefore the claim is time-barred.  For this reason the joint Supervisors have not and will not adjudicate the claim and it will not rank for distributions under the CVA.”
	Without their adjudicating on the claim, their understanding was broadly that it was not, as framed, a good claim.
31.	Given that indication Messrs Addleshaw Goddard, then acting for GFM, and not accepting that the time-bar operated against them, suggested that the claim should be adjudicated upon and that an application to court, which was then being contemplated, should be made both as to the time-bar (to reverse the ruling that the claim was time-barred) and as to the underlying question of adjudication of the claim.  They wrote:-
“As we have said, we consider that it is desirable if possible to minimise the risk of having to make more than one application to the court in this matter, i.e. an application to resolve the diligence issue, followed later by a second application to resolve the substantive issues.  We suggest that the Supervisor should now (i) address and make a final decision in respect of the diligence issue; and (ii) in any event adjudicate the substantive claim.  If it becomes necessary to involve the court all issues may then be presented efficiently within the same application.”
	However, the Supervisors’ solicitors were not content to take that course and they wrote:-

“For the reasons set out in our letter dated 16th October and above, and as confirmed by our letter of 24th October, the joint Supervisors have not and will not adjudicate the purported claim, and it will not rank for distribution under the CVA.  Accordingly, our letter dated 16th October was not a formal rejection of the purported claim for the purposes of the CVA.  Paragraph 30 of Part IV of section 2 of the proposals is not and cannot be invoked.  In the circumstances the 21 day period referred to therein does not apply.”
	Perhaps it does not matter, but I am far from clear why it is not an adjudication and a rejection of a claim to say that it is time-barred, but everyone has proceeded on the basis that there, as yet, has been no adjudication rejecting the claim. 
32.	GFM applied to the court in England on 5th November 2007 and its evidence and the relief it asked for addressed not the merits or adjudication but only the time-bar.  Before the hearing Mr. Spratt, as Liquidator, supplied to GFM an Annual Report to Creditors and he went on to add:-
“This report is being provided to your clients because they have lodged a claim form in the CVA of EH3.  The provision of this report is without prejudice to the joint Supervisors’ position and belief that your client’s purported claim is time-barred, and that there is in any event no legal basis for it.”
	Mr. Spratt is plainly there asserting that GFM’s claim, even if not time-barred, had no legal basis.  Indeed, the same had been asserted by his solicitors on 22nd February 2008:-

“It appears to the Supervisors that the purported claim is misconceived.”
	Also, on 3rd March 2008, Mr. Milsom had made a witness statement in the time-bar proceedings, a statement which he believed to be true, that GFM’s claim was misconceived, but there was still no formal rejection of claim, and no written reasons for rejection, and no clear date which set time running for the period within which dissatisfaction with an adjudication had to be expressed.  So Mr. Spratt’s letter is not on its own said by Mr. Davies to be a rejection, but it is one of a number of references said by Mr. Davies to illustrate that so closed has become the Supervisor’s mind on the subject of accepting or rejecting GFM’s claim that they must be treated as having rejected the claim or, at least, are not to be heard as now urging that the Supervisors have not rejected the claim.  Mr. Spratt’s unappealing response to comment upon his letter includes that he does not remember seeing it.
33.	GFM’s application to court for a finding that it was not time-barred came before Sir Andrew Morritt, Chancellor, who gave his judgment on 9th July 2008.  Despite the Supervisor’s earlier indication that they would not deal with the merits of the CVA claim, and hence that there might need to be two applications to court rather than one, Mr. Milsom, having conduct of the matters at KPMG, had deposed that GFM’s claim was in any event misconceived, was a misconception and was a purported claim which was misconceived.  Moreover, the Supervisors adduced expert evidence from Judge Walsh, a retired Judge in the United States, as to Delaware Law, evidence which went way beyond law relevant to the time-bar and went into the merits.  There was no finding by the Chancellor that the claim was misconceived and his order, so far as material, provided:-
“And it is further order that the Respondents do proceed to adjudicate the claim accordingly, that the Respondents do pay the costs of this application, such costs to be the subject of detailed assessment if agreed, that permission to appeal from this order be refused.”
	I think that sufficiently indicates the sense although that is only part of the order.  No stay of adjudication was asked for or granted, but leave to appeal was obtained by the Supervisors who suggested to GFM on 7th August 2008 – quite rightly – that despite that leave having been given, consideration of the merits of GFM’s claim should proceed for the purposes of adjudication.  The Supervisors suggested a meeting and asked for further information as to GFM’s claim.  
34.	In that letter KPMG do not say that they had enough information and evidence to reject the claim, despite their views already expressed that it had no legal basis and was misconceived.  Indeed, they never say that they are in a position to reject, and I am entitled to wonder whether they have ever considered that they are in such a position, which is far from a simple obverse of their not being in a position to accept the claim.  If a claim is accepted then under the CVA it is finally and bindingly accepted without possibility of reduction or being expunged and in the process leading to such an acceptance it is the Supervisors who are the finders of fact, and the determiners of any relevant law.  So before accepting a claim the Supervisors have to be at least reasonably sure that the claim can properly be accepted.  
35.	But things are quite different if the Supervisors feel that there is a reasonable ground, at least prima facie, on which a claim can properly be rejected.  In that case the rejection may be accepted by the claimant, or he may not act in time to challenge it.  But even if he does timeously challenge it, it will then not be the Supervisors who determine the claim as to its facts or its law, which subjects pass exclusively to either the court in England or the dispute tribunal according to which election is made under the process specified in the CVA.  It is not even the case, using liquidation authorities as an analogy, that the written reasons given for such a rejection are necessarily immutable or that inescapably no other reasons can be relied upon.  All this, in my judgment, does not undermine the force of the only case cited to me in this area, namely, In Re Home & Colonial Insurance Co. Ltd [1930] Ch Div 102.  
36.	So a Supervisor can, as it seems to me, reject without that higher degree of certainty or assurance that would be appropriate to an acceptance because the disappointed claimant still has a full opportunity to take the matter to the English Court or to the dispute tribunal, and the Supervisors have an ability to change from their stated ground for rejection where that can be done without injustice to the claimant.
37.	When I read the later and long letters from the joint Supervisors’ solicitors asking for yet further information of the broadest character, I cannot help thinking that either they have imposed upon themselves too high a threshold of certainty of the rightness of a decision to reject or, that not being the case (because they are, after all, very experienced members of a very experienced firm) that there is or may be some other explanation of their persistent failure to reject the GFM’s claim.  After all, GFM could hardly complain if their claim is rejected; that is exactly what they are praying for, and no other creditor of EH3 would be interested to complain if GFA’s massive claim was rejected. That there is indeed another explanation of the persistent failure to reject is part of Mr. Davies’s argument that I shall come on to below.
38.	To revert to the chronology, at about this time – summer 2008 – GFM had begun proceedings in the State of Missouri in the United States, which concerned attribution of liability for environmental liabilities being or including those of Blue Tee.  A good deal later, on 27th April 2009, and after the launch of the Delaware proceedings to which I shall refer, the Missouri proceedings were dismissed by consent. I am told that inter-State jurisdictional issues were those, or amongst those, that led to that consensual dismissal.  But without further argument or possibly also expert evidence as to issues such as those I am left quite unsure as to what, of relevance to the applications before me, can be made of the Missouri litigation.
39.	On 10th October 2008 Global Energy Finance LLC (“GEF”), a Delaware Corporation which was then and is now under the management of KPMG and, in particular, of Mr. Milsom, but which is not a CVA company, launched proceedings in Delaware concerned with the environmental liabilities of Blue Tee. GEF is a sub-subsidiary of a company which is a fellow subsidiary of EH3.  The conduct of GEF is not subject to the provisions of the CVA.  In the Delaware proceedings thus begun and to which GFM was and remains a defendant, GEF seeks relief, the most material parts of which for my purposes are these:-
“42  	GEF is entitled to a declaration from the Court that under the governing agreements Peabody Energy and GFM have assumed full indemnification obligations with respect to the Blue Tee liabilities.
43. 	GEF is further entitled to a declaration from the Court that under the governing agreements GEF and its applicable affiliates owe no obligation to indemnify either Peabody Energy or GFM with respect to the Blue Tee liabilities.”
	As I have said, I have not been taken to the Delaware proceedings in any detail but I apprehend that the expression: “and its applicable affiliates” in relation to GEF includes, or is intended to include, EH3.  If that is right then were such a declaration to be granted there would then have been a declaration the sense of which would have included that there is no CVA liability of EH3 to GFM of the kind which, in its claim form in England, GFM was asserting against EH3.  It is to be noted that EH3 was not then and still is not a party to the Delaware proceedings. 
40.	To come back to England, no stay was sought of the Chancellor’s order and that omission was quite deliberate on the Supervisors’ part.  On 11th March 2009 the Court of Appeal in England dismissed EH3’s Supervisors’ appeal against the Chancellor’s decision so that his direction that the Supervisors: “do proceed to adjudicate the claim accordingly”, which, in context, must mean according to the provisions of the CVA, was unchallengeable.  But, although there were one or more meetings in England and correspondence relating to GFM’s claims against EH3, little or no progress was made, not least, perhaps, because of a fear on GFM’s part that negotiations in England or information supplied in support of its claim in England might be used to put GEF at an unfair litigation advantage in Delaware.
41.	The Supervisors pressed for further information as to GFM’s CVA claim and on 27th May 2009 GFM sent to Mr. Milsom at KPMG its lengthy written submissions on both law and fact explaining and supporting GFM’s CVA claim, submissions which were bolstered on 18th June 2009 when GFM served a preliminary report of Professor James White, Professor of Law at the University of Michigan Law School.  The Professor’s report included detailed reasons and gave authority for his conclusion that Judge Walsh’s report had been wrong on two important issues.  Thus Professor White’s report said:-
“In my opinion therefore Judge Walsh is wrong to apply the rule of the specific governing the general to this case.  This is not a case where parties have expressed the same idea or concept twice, once generally and once specifically.  Here there are two ideas, two intentions, not two expressions of the same intention.”
	That was as to a conflict between general and specific terms.  On the subject of parole evidence Professor White says:-

“Only where there was an ambiguity apparent on the face of the document could parallel evidence come in.  That position was championed by Professor Willaston.”
	Then he says later:-

“The Supreme Court of Delaware has wrestled with these issues and has, contrary to Judge Walsh’s view, come down on the side of Willaston.”
	He concludes:- 

“In Eagle [Eagle Industries Inc v De Vilbis Healthcare] the court is returning to the requirement that one challenging a writing must show it to be ambiguous on its face before he may introduce oral explanations.”
	He thus differs from the retired Judge in two important respects.
42.	It is no part of my task to determine these issues but what is plain is that there was distinguished support for GFM’s approach to its CVA claim.  It could not be suggested that some easy knock-out point was available by which the Supervisors could destroy GFM’s claim; indeed, had that ever been the case the Supervisors would presumably have raised it when they raised the time-bar.  But the Supervisor still had doubts or difficulties with GFM’s claim or, as Mr. Davies would rather put it, at least purported to have doubts and difficulties.  The Supervisors accepted that it was for them carefully to consider the material in order properly to adjudicate the claim.  However, by 30th September 2009 still the claim was neither accepted nor rejected. In Mr. Milsom’s 10 page letter of that day questions were raised and information was sought and the Supervisors disclosed what they called their preliminary conclusions which may be characterised as being against acceptance there and then of GFM’s claim on the material then to hand and that further documentation and other evidence was needed.  This, it will be remembered, was at a time by which Mr. Milsom, as effective manager of GEF, was asserting in Delaware in a way consistent only with a case that there was no CVA environmental liability of EH3 to GMF.  Hence, with an air of exasperation GFM’s solicitors complained on 21st September 2009 that despite GMF’s full written submissions and Professor White’s preliminary report the Supervisors had failed to respond in any detailed way to GFM’s CFA claim which had been lodged in July 2007 and adjudication of which should have been under active consideration at the very latest from July 2008.  They complain too of bias, actual or apparent, and of a form of abuse as follows:-
“Your role in Delaware as party litigant might explain why, instead of addressing the written submissions and report of Professor White, you have now provisionally rejected the claim in the UK whilst also requesting our client to deliver to you very extensive further documentation.  In this respect your request appears to be designed to gain a litigation advantage in the Delaware proceedings rather than the proper adjudication of our client’s claim in the CVA of EH3.”
43.	On 1st October last year solicitors acting for GFM said:- 
“As you know, we completely disagree with your provisional conclusion” 
	- they are writing to KPMG - 

“... nevertheless, for the following reasons we consider that you should be treated as having rejected our client’s claim.”
	And then reasons are given.  They say:- 

“In these circumstances there is no practical advantage to be secured by prolonging this phase of the process and our client sees no point in searching for or providing to you the further documentation requested.  This also applies with regard to the information which you have requested in your letter of 15th September 2009.  We therefore invite you formally to confirm that our client’s claim is rejected.  If we do not receive such formal confirmation by 4 p.m. on Monday, 5th October 2009, we shall proceed thereafter on the footing that there has been a de facto decision to reject the claim which, for the purposes of Annex 9, was made on 5th October.  Thereafter, it is our client’s intention to elect to commence expert determination in accordance with the procedure summarised in para. (b) of Annex 9.”
	And that, of course, is the less formal dispute resolution process that the CVA prescribes.  
44.	If the request made by the Supervisors on 1st September 2009 was truly what was needed for an adequate adjudication of whether the CVA claim should be accepted or rejected, and hence also of whether it could be rejected, it was now apparent that that information would not be available from GFM, which was minded to supply nothing more and was asking for its claim to be rejected.  Neither GFM nor any other creditor of EH3 could complain if the claim was rejected and it had surely become plain to the Supervisors that the likelihood of their being in a position to accept the claim within any reasonable time, or perhaps at all, was truly negligible; yet still there was no adjudication.  The claim was in limbo, a position which I would think would concern or surprise both the Chancellor and the Court of Appeal, given their conclusions of two years and one year previously respectively.
45.	On 27th November 2009 the Supervisors’ solicitors described what options it considered were open to the Supervisors.  I shall come on to the options shortly, but they did indicate that they had serious reservations about an immediate rejection of the GFM CVA claim and also, I apprehend for the first time, mentioned the possibility of a joinder of EH3 to the Delaware proceedings.  As I mentioned earlier, on 17th December 2009 GFM issued its originating application to be followed by the Supervisors’ one of 23rd December 2009.  As the relief claimed in effect overlap I need only refer to the latter application which, after the long introduction which I have embarked upon, can now, I hope, be understood.  
46.	Mr. Tucker and Mr. Spratt, as both Liquidators and Supervisors of EH3 seek the following relief:-
“1.  Directions pursuant to s.7(4)(a) of the Insolvency Act 1986 and/or para. 18.11 of the CVA and/or s.112 of the Insolvency Act 1986 as to the manner in which the joint Supervisors of EH3 CVA (“the Supervisors”) should adjudicate the claim submitted by Gold Fields Mining LLC (“GFM”) in the CVA , the claim, and in particular whether or not:
(i)  	the Supervisors should proceed forthwith to reject the claim and treat it as a disputed claim under the CVA; or 
(ii)  	the Supervisors should proceed to adjudicate the claim by inviting JFM to submit such further supporting material as it wishes and thereafter determining the claim in accordance with appropriate advice.
(iii)  	the Supervisors should adjourn any further consideration of the claim pending the conclusion of the proceedings commenced by Global Energy Finance LLC in Delaware (“the Delaware proceedings”); or
(iv)  	the Supervisors should adjourn any further consideration of the claim pending the conclusion of the Delaware proceedings but, in addition, EH3 should join the Delaware proceedings in order so far as necessary to seek the resolution by the Delaware court of the claim and any relevant claims by EH3; or
(v)  	the Supervisors should apply for directions from the court as to whether or not the claim should be allowed in the CVA; or
(vi)  	the Supervisors should apply for directions from the court as to whether or not the claim should be allowed in the CVA but in addition EH3 should seek determination by the court of any relevant claims which it has.”
	The rest is rather consequential and ordinary.  I shall need to deal with these options but I shall do so in a different order, but I shall continue to use the numbers by which the options are identified in that originating application.
Option 2.
47.	This proposes awaiting further material from GFM, but GFM has indicated it will supply no more and there is no obligation upon it to supply more.  The usual sanction which a Supervisor has, namely, something on the lines of: “I will reject your claim if you fail to supply what I have asked for” is, of course, here no sanction.  Indeed, Mr. Arden accepts that, as to the supply of further information from GFM, the Supervisors have met an immovable object.  So Option 2 as framed is inappropriate.  Mr. Arden sought to modify Option 2 to refer to the Supervisors’ awaiting material other than from GFM but I was not told what it could be, from whom it might be sought and whether it had already been asked for and if not, why it had not been asked for already.  Without such information I would be completely unable to come to an informed view as to the utility of awaiting a supply from others and unable to form any view as to how long I ought to give for the collection from such unidentified possible sources of whatever unidentified material was hoped to be got in.  I rule out Option 2 both as it is framed and as it was suggested it could be varied.
Option 5.
48.	The CVA confers upon the Supervisors the task of adjudicating on CVA claims; it is they who are to accept or reject the claims.  The proposers of the arrangement represented not just to GFM but to all CVA creditors that that would be the case.  There can be cases where circumstances have arisen in which it is proper for Liquidators or Supervisors to surrender to the court and for the court to accept the surrender of a discretion otherwise conferred on such office holders, and in such cases the court does not then merely indicate that a particular course would not be inappropriate or may be adopted or give liberty for its adoption, but actually decides there and then what is to be done and so orders.  But I have not understood Mr. Arden to surrender to the court the Supervisors’ discretion as to the initial adjudication of CVA claims, and I have certainly not accepted such a surrender, so the adjudication has to be by the Supervisors.  Quite what directions are necessary or desirable to that end is not clear, and that has not been spelled out.  Directions that GFM’s claim be rejected unless it supplies specified further material by such and such a date would not assist given GFM’s indication that it will supply no more and in the absence of a power to oblige it would be wrong to await unspecified material over an unspecified period.  Directions that GFM’s claim be admitted in this or that circumstance are not asked for and certainly the Supervisors would oppose any such directions, so I am not at all attracted by Option 5.  
Option 6.
49.	Every weakness which Option 5 has is to be found also in Option 6, but Option 6 gives rise to the additional and important objection that it seeks to oblige GFM to have the merits of its CVA claim itself, and not merely the initial adjudication of it, determined by this court.  That would fly in the face of the CVA.  It would be to treat the CVA creditor in a very different way to other CVA creditors.  It would, even in circumstances in which its claim had been adjudicated upon and rejected, deny to GFM the important right at its sole election to choose between determination on the merits of the claim by the dispute tribunal process specified in the CVA or by the English Court.  I see no possible warrant for so denying the right to GFM.  The CVA could have provided for denial of the right in particular circumstances, for example, in relation to very large cases or those involving foreign law, but it did not do so.  The CVA could, at least in theory, have been modified so as to prescribe for some particular exception but that has not been attempted.  I do not see that Option 6 could properly be adopted by the court. 
Options 3 and 4.
50.	These options require me to say something further about the Delaware proceedings.  No present party to them is a CVA company and to that extent they are not within the control of the Liquidators of EH3 or EH3’s Supervisors.  They are truly massive proceedings whether one has regard to the literally hundreds of millions of dollars which are the subject matter or to the extent of the discovery in the paper and deposition material and other evidence that they already or shall involve.  Mr. Arden indicated that there are half a million documents in the US disclosure thus far but later information suggests that that may be a very considerable underestimate.  35 depositions, it is said, have already been noticed and parties have already expressed an interest in deposition from a further 25 persons, some of whom are deponents outside the USA.  Even as now constituted they plainly will not be concluded shortly.  Even if the additional pleading, discovery and related applications, of which there are several already before the Delaware Court, and others which are foreseeable (or not unlikely) do not cause an abandonment of the present timetable for a liability decision at first instance later this year, and a quantum decision in the spring of 2011, then, given the sums and the complexity involved appeals will be almost inevitable.  In practical terms, awaiting an outcome in Delaware must be viewed as introducing a delay measurable in years rather than months.  But that is only as to how those proceedings are currently constituted.  On that basis EH3 would be unbound by any decision.  So if Delaware’s conclusion, in effect, were against EH3, it could claim that it was not bound by the outcome and that, pursuant to the CVA, the CVA’s claim still had to be ruled on either, at GFM’s election, by the Court in England or by the CVA dispute procedure.  Conversely, as GFM is a part in Delaware it would bound by the decision against it and might find it therefore rather harder to argue in either the English Court or at the dispute resolution procedure that it was free to assert a decision contrary to that to which it was a party in Delaware.  
51.	Option 4 proposes to deal with that obvious asymmetry and potential unfairness by contemplating that EH3 should join the battle in Delaware.  It was not joined initially in October 2008; it has not yet applied by its Liquidators or Supervisors to join.  I do not know why that is so.  The Liquidators charged with getting in EH3’s assets and protecting its estate have so far not applied to join.  I am not told what amendments, if any, they would wish for or require to be made to the Delaware proceedings were they to be joined.  I cannot judge what effect the joinder would have on discovery or on the evidence to be adduced.  I am not told what the reaction of other parties to that joinder would be although I can expect GFM, at least, to object.  My understanding, incomplete and inadequate as it necessarily is as to Delaware Law and procedure, is that it is open to existing parties to object to a joinder on the ground, first, that that the application is too late in the sense of its simply being something that the would-be joiner could and should have moved for earlier, where there is no adequate explanation of his failure to apply earlier.  Secondly, and a fortiori, a ground for refusing joinder is where the joinder might, to the detriment of any existing party, threaten compliance with any existing timetable for the hearing or for procedural steps prior to the hearing.  On the material before me there is reason to suppose that even a prompt application by EH3 now to join in Delaware might fail and that the asymmetry to which I have referred would therefore persist to the possible unfair disadvantage of GFM.  But even if EH3 were to be added would it be right for the Supervisors’ adjudication to await a final conclusion which very likely would be more than a year away in Delaware? 
52.	Mr. Arden’s principal reasons for awaiting Delaware are that doing so avoids the risk of inconsistent decisions and, given the size and complexity of GFM’s claims, that court proceedings in Delaware are more appropriate in the sense of being more likely to arrive at a fully informed and just conclusion than are the relatively rough and ready provisions of the process of the CVA dispute resolution tribunal.  It is, of course, costly and wasteful to have parallel proceedings, says Mr. Arden, but the Delaware proceedings on the one hand, and the CVA process on the other hand under which the CVA claim, after being adjudicated upon, would proceed under the provisions of the CVA, are not parallel for this purpose as the CVA provisions alone, at any rate as yet, would involve EH3 as a party, whereas the Delaware proceedings do not involve EH3 as a party.  EH3 incurs no costs and wastes no time in Delaware as it is not there and so there it has nothing to complain of, and GFM can hardly complain of waste if it seeks, as it does, to go ahead in England despite already being a party in Delaware.
53.	As for the risk of inconsistent decisions, Mr. Arden’s skeleton argument contemplated reference to several cases as to forum conveniens disputes but I was not taken to any such authorities in argument and I think rightly so as, where there is not merely an inter partes agreement as to a form of resolution but a form therefore which is prescribed to bind all creditors and which has been imposed by Statute rather than being merely agreed upon, then, although there are in such a circumstance similarities, very different considerations or considerations to be given different weight arise, as Mr. Davies argues, in comparison with those which are given weight in forum conveniens cases.  That is not to say that the risk of inconsistent decision is irrelevant but it does lead one to wonder what is an inconsistent decision for this purpose?  A decision, I would think, is only truly inconsistent for the purposes of considering the risk of it if it binds both sides to a decision in the case inconsistency with which is being considered.  But for the reasons I have given, given that EH3 is not now, and may never become, a party to the Delaware proceedings, there may never be any risk of truly inconsistent decisions.  
54.	Mr. Arden then says that even if the Delaware decision does not bind EH3 for want of EH3 being a party the Delaware decision would at least inform the Supervisors and either the CVA dispute resolution tribunal or the English Court – depending on which route was selected – and would help the relevant Body to a decision.  But, of course, other material might inform the Supervisors and the English Court or the dispute tribunal, after GFM’s election for one or other route.  For example, even should the Delaware Court decide inconsistently with Professor White’s views or Judge Walsh’s views, either side could, at an expert level, adduce expert views, no more or less binding than would be Delaware’s judgment, in order to counter that Delaware judgment.  To wait literally for years for a judgment which might merely “inform” the Supervisors, the English Court or the CVA dispute resolution tribunal – depending on which route was selected – would be to depart very substantially from the relatively speedy resolution of disputes which must have been a factor which commended the CVA creditors and which was there set out as a universal process for the resolution of disputes within the CVA.
55.	Moreover, to await a Delaware conclusion before even deciding to accept or reject the claim form is to require of the Supervisors too high a degree of certainty as to the rightness of their adjudication decision.  No one is asking the Supervisors to accept the claim here and now.  What is sought is for a decision, in effect, to reject it so that the matter can then proceed before which ever of the two Bodies – the English Court or the dispute tribunal - the CVA gives to GFM at its sole election to choose between.  If the Supervisors assert, as they plainly do, that there is not material already to hand on which they can properly accept GFM’s claim then instead they need to consider whether that material justifies a rejection and, where GFM will give no further material, where no other relevant source of material is identified as a likely supplier and where Supervisors at least provisionally have concluded that the claim is bad, whether it is not surely time for adjudication and rejection, it would not be relevant for the Supervisors to say that the present material, on law or on fact, is inadequate for them to arrive at an adequate final decision as to GFM’s claim being ruled upon one way or another on its underlying merits; that would be to trespass on an area which the CVA assigns elsewhere.
56.	Of course, it would be open to the tribunal or the English Court, depending on which might become appropriate under the CVA once there had been a rejection of GFM’s claim form, itself to hold that it had to adjourn to await Delaware.  Mr. Arden accepted that that would be open to it.  The relevant body would need carefully to consider inter alia whether such adjournment was consistent with the purpose and the provisions of the CVA, as to which I say nothing to affect the English Court or the English Tribunal’s decision, but it is in my judgment wrong of the Supervisors to act at this juncture consistently with an assumption that the English Court or the dispute tribunal would assuredly feel that it or they had to await Delaware and even more wrong to assume that because they (the Supervisors) would prefer to await Delaware then so ought the English Court or the CVA tribunal.
57.	As for Delaware offering a forum and process more appropriate to decision making where the issues are complex and where great sums are at stake than would be the process of the CVA dispute tribunal, that argument either seeks to deny GFM the right to elect between the Tribunal and the English Court, a right given to it once its claim has been rejected by the Supervisors, or it assumes that GFM would elect for the Tribunal.  At one point GFM had, indeed, indicated that it would so elect but it has resiled from that and now reserves the right to elect as it might choose.  If there is a rejection of claim (and it is not possible to see an acceptance, if at all, earlier than after a period measurable in years) then, if GFM elects for determination by the English Court, I have not heard it said that that would be less informed or less just than a court decision in Delaware.  Whichever jurisdiction came to be used may wish to have to admit expert evidence as to the law of the other, but I do not see either would be less just than the other, although process in England would have the material advantage that it would involve only EH3 and GFM.  So if English Court process were to be chosen, there is nothing in the argument that Delaware is a better forum.
58.	If, alternatively, GFM were to elect for the CVA dispute resolution tribunal, it is hard to see how the Supervisors could fairly complain about GFM selecting a route which the very professionally considered and comprehensive CVA had represented as open to all CVA creditors to elect for the resolution of all CVA disputes.  The terms of the CVA cannot be departed from simply because some better process could have been, but was not, prescribed, or because what was once thought to be convenient or appropriate is said to have transpired not to be. 
59.	Turning to a particular aspect, the Liquidators are entitled to ask the court for directions under Part 3 clause 7.5 of the CVA and Option 4 asks for a decision that EH3 should join the Delaware proceedings.  It would, I think, be excessive for me to order that they must do so where that would be opposed by one creditor and where no other creditors, or Committee of Creditors, has been consulted, so far as I know.  It is best left as a matter for the Liquidators.  If it is a proper step in relation to getting in or protecting EH3’s assets, then they are already at liberty to seek that joinder (Part 3, clause 17.1).  If it is not, they are not at liberty to do so.  If, ultimately, I select Option 4 as the best or least inappropriate option, I shall need to consider whether to give liberty, but for the moment, I do not do so. 
60.	So far it will have become apparent that I have real reservations about Options 3 and 4 but the Options need to be considered on a comparative basis and so on that basis I turn to Option 1.  
Option 1
61.	I indicated in the course of argument that I could not see my way to ordering Option 1 as framed in Mr. Tucker’s and Mr. Spratt’s originating application, or, indeed, as framed in GFM’s.  It is not for the court to require the Supervisors to reject the GFM claim.  The question of its initial acceptance or rejection is only for the Supervisors and I am very reluctant by some deeming process to treat the matter as if there had been a rejection, if only because rejection requires written reasons from the Supervisors and there are none yet given, and its date needs to be quite clear so that it sets the clock running for time-bar purposes.  Thus argument has been addressed to an Option 1 in a rather modified form, which I would cast as follows, namely:- 
“The Supervisors should proceed within 21 days from 19th March 2010 to admit or reject the claim (and if rejecting it, to give a written statement of the CVA Supervisors’ reasons therefor to GFM pursuant to the provisions of the CVA) and, if rejecting, it shall thereafter and until agreement, further order or appropriate decision to the contrary, treat the claim as a Disputed claim within the applicable provisions of the CVA.”
	An order in some such terms has real advantages over any other of the options put before me.  It recognises that in practical terms there is no prospect of an acceptance of GFM’s claim within any reasonably short period, but it does not preclude adequate consideration by the Supervisors of the rightness of their now converting their preliminary conclusions for rejection into final ones, they have a further 21 days to reflect on and express reasons for rejection, in addition, of course, to the period of well over two years since GFM lodged its claim in July 2007.  The Supervisors, in my judgment, have already had a period which, given the requests made for and the supply of documents and evidence and other material and given also the period of uncertainty whilst the English Court process as to the time-bar was awaited, has now to be held as reasonable for the adjudication required of them.
62.	This option recognises that, consistently with the broad purpose of the CVA, a claim cannot fairly be left, after the expiry of a reasonable period for decision, in a limbo of being neither initially rejected or accepted.  Importantly, it does not override but rather gives force to the very dispute processes of the CVA which, ex hypothesi, commanded the approval of CVA creditors and hence came to be imposed on all of them.  There is no power in the CVA to pick and choose which CVA liabilities shall be ruled upon outside the CVA proposals, which were intended to be universal.  This is not to say that the CVA process is impeccable; it could be that it risks, if not strict inconsistency with, at least its being an uncomfortable bedfellow with, some ultimate decision in Delaware.  
63.	Mr. Arden says that the Supervisors have been concerned that it may be hard to expect them to risk an inconsistency with the Delaware decision unless they are given the protection of a court ruling in England that entails running that risk.  But, as I have mentioned, that concern is without real foundation.  Leaving aside just what is an inconsistent decision, there is no one who could complain if, as GFM asks, its CVA claim is first rejected by the Supervisors and is then passed under the CVA proposals for determination thereunder either by the English Court or, at the creditors’ sole election, to the dispute tribunal. It could also be that the Tribunal’s process, if that particular form is used, is less comprehensive as to its available forensic processes or legal skills than the full panoply available in Delaware, but it does have the advantage of being the very process chosen by the CVA companies, proposed by them and accepted by the CVA creditors as proper to be imposed upon them universally, whether they individually voted to that end or not.  One would need to find very compelling reasons for permitting Supervisors who have had the benefit, for example, of the moratorium provisions of the CVA for almost five years, to escape one of its important provisions and I fail to detect any such compulsion. 
64.	Regarding the matter as one of discretion, which may be to underestimate the force in favour of Option 1, even so, for the reasons I have given, in a comparative evaluation of options as between Option 1 as modified, and all the other options, and in particular, as against Options 3 and 4, I prefer Option 1 – warts and all – to the far more disfigured appearance of its rivals.  In the circumstances I do not give liberty to the Liquidators to join EH3 to the Delaware proceedings.  I do not bar them from attempting such joinder, but they would do so without the court’s imprimatur and at their own risk.
65.	That leaves me to say only a little as to Mr. Davies’s arguments as to real or apparent bias in either or both of Messrs Tucker and Spratt, as to abuse by them in causing or permitting the migration to the USA of papers obtained here in the course of their duty to consider adjudication as to GFM’s CVA claim and as to their being disingenuous in their assertion that all along they have been motivated by nothing more than a wish to get the initial adjudication right.  “We fear”, had said Mr. Arden, “that if we reject now we may not have properly performed our function as supervisors.”  Such arguments could have been of significance as to the outcome but, in the event, I have ruled in favour of Option 1 without needing to deal with them.  I do not say that GFM was wrong to raise the issues or that any was wholly without possible prima facie foundation but I do say that each is an allegation of some gravity against experienced and professional persons such as Messrs Tucker and Spratt and such that I would not feel able to rule upon them without cross-examination.  That was not sought.  As an example: how could I possibly rule that in some abusive way documents had been obtained with a view to their migration to the USA without at least knowing what papers had been sent, by whom, to whom and when, and with what reason given or in mind for their transmission.  I thus make no findings as to bias, actual or apparent, as to abusive dealing with documents or as to disingenuity on the part of Messrs Tucker and Spratt or those acting in the liquidation or supervision of EH3 on behalf of those gentlemen.
66.	There was some talk as to whether GFM could, relying on the provisions of the CFA, restrain any action by EH3 in the USA inconsistent with the CVA by way of an anti-suit injunction.  Plainly the supervisors are susceptible to an English injunction if it becomes fit to grant one, but I will leave that issue to be dealt with if and when it arises.  Another point raised was as to set off; that could become relevant as between EH3 and GFM if there was liability going one way under one account between them, and going another way on another.  The CVA provisions as to set off might then become applicable, but, as I have understood the argument, the claims and counterclaims here would or might well all be on the one account, even if any were found to exist, so I do not see that set off provisions are as yet relevant.
67.	All this, I hope, now leaves the form of my order and questions as to costs and perhaps ancillary matters for further discussion.
L A T E R:-
68.	So far as concerns costs, that GFM’s costs should be paid by the supervisors on both applications is not opposed.  What is opposed is Mr. Davies’s further application that the assessment should be on an indemnity basis.  Mr. Davies says that what his clients have now achieved in March 2010 is that which they had first asked for in 2007.  The Chancellor ruled on material then in front of him that there should be an adjudication “accordingly”, namely within the provisions of the CFA, and that is now what has been ordered if effect is given to my judgment.  This, therefore, says Mr. Davies, is a situation in which a party has been forced for the second time to have to litigate to get to a conclusion that it had proposed in the first proceedings.
69.	Given the position as explained in the White Book at 44.4.3 on p.1194 of the First Volume of the 2009 Edition, that, amongst the important considerations for an award of indemnity costs, is where the situation is out of the norm, says Mr. Davies, it would here be appropriate because that factor, he says, surely makes this out of the norm.  Mr. Davies is careful to say that no conduct argument against the Supervisors or Liquidators is here presented; he relies exclusively on the circumstances being exceptional to the extent of being so out of the norm that the indemnity basis would be appropriate.
70.	Mr. Arden points out that the Supervisors and Liquidators asked for directions, as they are entitled to do and as the circumstances required, in effect, that they should. He says also that a decision in favour of GFM on an indemnity basis would affect other creditors, to which Mr. Davies responds that after all if “the losers”, to so describe them – the Supervisors and Liquidators – are going to get their costs on an indemnity basis out of the estate, as they will, then surely so also should GFM, the winners, given, in particular, the unusual nature of the application whereby it has had to be in the second proceedings that GFM eventually gets that which it asked for in 2007.
71.	I think the circumstances are well out of the norm, if only to the curious extent that one finds a creditor asking for his claim to be rejected.  I think it is right that circumstances, as they have developed, have in effect forced the CVA creditor, GFM, to have to come to court twice to get that which it should have obtained relatively shortly after the Chancellor’s decision on the time-bar proceedings.  Mr. Davies has always been careful not to rely on any misconduct ground but, on the “out of norm” ground, which he makes good, and, accordingly, I order the costs in favour of GFM to be paid by the Supervisors and Liquidators on both applications, to be assessed on the indemnity basis.