Neutral Citation Number: [2016] EWHC 2432 (Ch)

IN THE HIGH COURT OF JUSTICE 
CHANCERY DIVISION
COMPANIES COURT 

IN THE MATTER OF PRIMEO FUND IN LIQUIDATION
AND IN THE MATTER OF THE INSOLVENCY ACT 1986
AND IN THE MATTER OF THE CROSS-BORDER INSOLVENCY REGULATIONS 2006

Nos. 13865 of 2009
and 5569 of 2009 
Rolls Building
Date: Wednesday, 14th September 2016

Before:

MR. JUSTICE NUGEE

B E T W E N :
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 (1)  GORDON MACRAE
(2)  ELEANOR FISHER
	(The joint official liquidators of Primeo Fund (in liquidation)	Applicants
-  and  -
(1)  KPMG LLP 
	(2)  DAVID YIM	Respondents
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MR. R. FISHER and MR. R. AMEY (instructed by Enyo Law) appeared on behalf of the Claimants.

MR. D. BAYFIELD QC  (instructed by Herbert Smith Freehills LLP) appeared on behalf of the Defendants.
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J U D G M E N T (As approved by the Judge)
MR. JUSTICE NUGEE:   

1	I propose to give you an answer now, with very brief reasons.  If either party wants fuller reasons, I will provide them in due course.

2	In very brief summary: 

		(1) There is no dispute that there is jurisdiction to make these orders
	
(2) The basic principle for the exercise of the discretion which therefore arises is that I should follow the guidance given by Lord Slynn in British & Commonwealth Plc (Nos. 1 and 2) [1993] AC 426, in particular at 439D:
	
	“the discretion must be exercised after a careful balancing of the factors involved - on the one hand the reasonable requirements of the administrator to carry out his task, on the other the need to avoid making an order which is wholly unreasonable, unnecessary or ‘oppressive’ to the person concerned.”

See also 439G:

	“the applicant must satisfy the court that, after balancing all the relevant factors, there is a proper case for such an order to be made. The proper case is one where the administrator reasonably requires to see the documents to carry out his functions and the production does not impose an unnecessary and unreasonable burden on the person required to produce them in the light of the administrator's requirements.”

(3) I am satisfied that the joint liquidators reasonably require the information  in order to carry out their functions.  Their functions include pursuing the claims which are currently before the Cayman court.

     (4) Applying the test of whether the order will be unreasonable, unnecessary or oppressive, I am satisfied that the primary focus is on the respondent to the application - in this case KPMG and Mr. Yim.  On the facts, Mr. Bayfield accepted that it would not be oppressive to KPMG to disclose the limited number of documents concerned which have already been identified and for which the applicants have agreed to pay their costs of so doing.  So far as Mr. Yim is concerned, I do not believe it is in the circumstances oppressive to Mr. Yim, although it may be inconvenient to him and cause him some work (see again British & Commonwealth at 429H) to answer a relatively short questionnaire.

	(5) I accept (see Morris v Director of the Serious Fraud Office [1993] Ch 372) that the interests of other parties can and should be taken into account.  The underlying principle is, as one would expect, that of fairness, and I accept that that can involve fairness to others, and in particular here to the Cayman defendants.  I accept that in certain cases it can be unfair to a defendant to litigation for s.236 powers to be used to examine the defendant himself, or the defendant’s witnesses, and thereby circumvent the ordinary processes of litigation.  There are a large number of examples of that, in the reported cases.  However, I do not accept that that can be equated with a hard and fast rule, that it is always unfair for a liquidator qua litigant ever to use the s.236 powers to obtain something which it could not otherwise obtain.  The discretion, as has been repeatedly said, is one which is not to be fettered by hard and fast rules or the facts of a different case.  

	(6) On the facts of this case the Cayman defendants have put in issue in the Cayman proceedings the question of what KPMG and in particular Mr. Yim said to HSBC at the time of the reports which HSBC obtained for the benefit of the Cayman defendants.  That is relevant, or arguably or potentially relevant, to the question of whether the Cayman defendants were in breach of the duties which it is alleged that they owed to Primeo.  I see nothing unfair, let alone oppressive, in the joint liquidators of Primeo seeking further information about that same issue from those able to give them information, even though their  dominant (or indeed even sole) purpose is to advance their knowledge and information in the issues which arise in the Cayman litigation, even if they could not otherwise have obtained it.  The balance that is referred to by Lord Slynn between the reasonable requirements of the administrator to carry out his task, or in this case the joint liquidators to carry out their functions, and the need to avoid making an order which is unreasonable, unnecessary or oppressive, either to the respondents to the application or to the Cayman defendants, it seems to me, comes down clearly on the facts of this case in favour of granting both limbs of the application.

L A T E R

	I will order the respondents to pay the applicants the cost of the application.  It is true that one could not realistically expect KPMG and Mr. Yim to voluntarily disclose documents which were confidential without the consent of HSBC, but the matter was fought out as a contested application on the question of principle, and on that the respondents have lost.  

	That being the real issue before me, I do not think that it is a case where I should depart from the general rule that the unsuccessful party should pay the successful party’s costs.

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