Neutral Citation Number: [2015] EWHC 1514 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT
No. 72 of 2014
Rolls Building, Royal Courts of Justice
7 Rolls Buildings, Fetter Lane
London EC4A 1NL
 
Wednesday, 13th May 2015
Before:

MR. JUSTICE NEWEY
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IN THE MATTER OF HARTMANN CAPITAL LIMITED
(IN SPECIAL ADMINISTRATION)

And

IN THE MATTER OF THE INVESTMENT BANK SPECIAL
ADMINISTRATION REGULATIONS 2011

(1)	HARTMANN CAPITAL LIMITED
(in special administration)
(2)	ANDREW ANDRONIKOU
(3)	PETER KUBIK
(as joint special administrators of Hartmann Capital Limited (in special administration))
Applicants
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MR. A. AL-ATTAR (instructed by Bird & Bird LLP) appeared on behalf of the Applicants

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J U D G M E N T
MR. JUSTICE NEWEY:   
1	I have before me an application by the joint administrators of Hartmann Capital Limited for a declaration which would establish in substance that they are entitled to take advantage of the funding regime which applies in relation to insolvency proceedings generally.  

2	The Government has in recent years taken steps to reform the operation of no win no fee conditional fee agreements, but it has made an exception in relation to insolvency proceedings.  The Government’s thinking in that respect can be seen from a written statement made by the relevant Minister on 26th February of this year, to which I was taken by Mr. Adam Al-Attar, who appears for the applicants.  That statement confirms that the Government has made reforms in respect of no win no fee conditional fee agreements, but goes on to say this: 

“The Government will therefore delay commencing sections 44 and 46 of the LASPO Act 2012 [i.e. the Legal Aid, Sentencing and Punishment of Offenders Act 2012] for insolvency proceedings for the time being.  Accordingly, no win no fee agreements in insolvency proceedings will continue for the time being to operate on the pre-LASPO Act basis with any conditional fee agreement success fees and after the event insurance premiums remaining recoverable from the losing party.”

3	The Minister thus spoke in terms of conditional fee agreement arrangements continuing to be available in respect of insolvency proceedings.  

4	The relevant statutory instrument, which is the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Commencement No 5 and Saving Provisions) Order 2013, is, however, expressed in more specific terms.  Article 4 of that order states that earlier articles are not to apply to, among other things, “proceedings brought by a person acting in the capacity of an administrator appointed pursuant to the provisions of Part II of the 1986 Act”, or “proceedings brought by a company which has entered administration under Part II of the 1986 Act”.  In each case, therefore, there is a reference to the appointment of administrators under or pursuant to “Part II of the 1986 Act”, that being a reference to the Insolvency Act 1986.  

5	Part II of the Insolvency Act comprises section 8.  That states that Schedule B1 to the Act is to have effect, and Schedule B1 in turn provides for the appointment of administrators.  

6	The difficulty which arises in the present case is that the administrators of Hartmann Capital have been appointed pursuant to one of the specific regimes which have been introduced over the last few years.  The relevant regulations in this instance are the Investment Bank Special Administration Regulations 2011.  Those provide, as can be seen in regulation 3, for “a procedure to be known as investment bank special administration”.  Regulation 4 explains that an “investment bank special administration order” is “an order appointing a person as the investment bank administrator … of an investment bank”, and then regulation 7 provides that on an application for a special administration order the court may, among other things, grant the application in accordance with regulation 7(2).  

7	As Mr. Al-Attar stressed, the regulations cross-refer to Schedule B1 to the Insolvency Act, and in many respects the special administration regime corresponds to the general regime for which Schedule B1 to the 1986 applies.  It does not, however, follow, and indeed is clearly not the case, that the administrators of Hartmann Capital have been appointed as such pursuant to Schedule B1 to the Insolvency Act in any strict sense.  It is noteworthy, in fact, that the definitions to be found in regulation 2 of the 2011 Regulations refer specifically to Schedule B1 and define “Schedule B1 administration” as “the administration procedure set out in Schedule B1”.  That regime, while, as I say, according in many respects with the special administration regime, is evidently distinct.

8	Mr. Al-Attar asks me to adopt a purposive approach.  There can be, he says, no sensible reason for excluding the administrators of an investment bank, or administrators appointed pursuant to one of the other specific regimes, from the general exemption for which article 4 of the 2013 Regulations provides as regards insolvency proceedings.  That submission clearly has very considerable force.  I can think of no sensible reason for denying the administrators of an investment bank the funding possibilities which are available to ordinary administrators.  I cannot, however, see how I can achieve the result for which Mr. Al-Attar contends consistently with the wording of article 4 of the 2013 Order.  As I have already indicated, article 4 speaks in specific terms of an administrator “appointed pursuant to the provisions of Part II of the 1986 Act” and a company which has “entered into administration under Part II of the 1986 Act.”  

9	Hartmann Capital has not, as it seems to me, entered into administration under Part II of the 1986 Act, and its administrators were not appointed pursuant to the provisions of that part.  They were appointed rather pursuant to the 2011 Regulations.  

10	With regret, therefore, I do not think I can accede to Mr. Al-Attar’s application.  It would seem to me to make sense to make legislative provision achieving the result for which Mr. Al-Attar contends, but I do not think it is open to me to achieve it as a matter of construction of the relevant regulations.  As matters stand, therefore, and in the absence of further legislative intervention, it would seem that the administrators of Hartmann Capital are denied the funding possibilities available to other administrators.