In the recent UK case of Wright and others v HMV Ecommerce Limited and another  EWCH 903, the Court considered whether an electronic filing (e-filing) of a notice of appointment of administrators by directors outside the court’s opening hours was valid.
The e-filing of court documents is governed by Practice Direction 510 – The Electronic Working Pilot Scheme (“the E-Filing PD”). Paragraph 2.1 of the E-Filing PD states that e-filing “enables parties to issue proceedings and file documents online 24 hours a day every day all year round, including during out of normal Court office opening hours and on weekends and bank holidays”. Paragraph 2.2 of the E-Filing PD makes it clear that “Electronic Working applies to and may be used to start and/or continue……..insolvency proceedings”.
There are a number of stated exceptions to the availability of e-filing, including when there is planned or unplanned “down-time”, and importantly:
“(c) where the filing is of a notice of appointment by a qualifying floating charge holder under Chapter 3 of Part 3 of the IR 2016 and the court is closed, in which case the filing must be in accordance with rule 3.20 of the IR 2016”.
Further, paragraph 8.1 of the Practice Direction – Insolvency Proceedings 2018 (“the July 2018 PD”) states that “For the avoidance of doubt, and notwithstanding the restriction in sub-paragraph (c) to notices of appointment made by qualifying chargeholders, paragraph 2.1 of the Electronic Practice Direction 510 shall not apply to any filing of a notice of appointment of an administrator outside Court opening hours, and the provisions of Insolvency Rules 3.20 to 3.22 shall in those circumstances continue to apply”.
E-filing a notice of intention to appoint administrators (“NoI”) – in or outside of court hours
When e-filing an NoI, paragraph 5.4 of the E-Filing PD states the following as to when that filing will be effective:
- If a fee is payable, the date and time of filing and the date and time of issue will be deemed to be the date and time the payment is made
- once a document filing is accepted, a notice will appear on the e-filing account confirming (1) that the document has been accepted and (2) the date and time of filing/issue.
Paragraph 44 of Schedule B1 states that the interim moratorium comes into place upon “filing” of the NoI. In accordance with the contents of the E-Filing PD, the filing takes place once the fee is paid and in accordance with paragraph 44 the moratorium comes into existence at that point, even if the fee is paid outside of court working hours using the e-filing system.
E-filing a NoA out of court hours?
Paragraph 2.1(c) of the E-Filing PD states that a NoA cannot be e-filed out of court hours by a qualifying floating chargeholder. Paragraph 8.1 of the July 2018 PD states that it is not possible to make “any” filing of an NoA out of court working hours using the e-filing process, whether by a QFCH, a company or directors, but only “in accordance with rules 3.20-3.22 of the IR 2016” (i.e. by e-mail or fax). Rules 3.20-3.22, however, only apply to a QFCH appointment of administrators. There is therefore ambiguity as to whether a company or a directors’ NoA can be filed out of hours using e-filing. That was the question considered in the Wright case.
In Wright, a directors’ NoA was e-filed outside court opening hours, at 5.54pm on 28 December 2018. An email confirming receipt was automatically generated by the court at 5.56pm.
That same evening, the administrators obtained an order on a telephone hearing that they had been validly appointed at 5.54pm that day. It is unclear whether the provisions of the July 2018 PD were considered at that hearing.
The matter came before the court again in January 2019 when Mr Justice Barling considered whether paragraph 8.1 of the July 2018 PD had any effect on the validity of the NoA filed on 28 December 2018. Whilst the judge stated there was an ambiguity in the July 2018 PD, he did not rule on whether it was possible for a company or directors to make an appointment of administrators out of hours using e-filing. Instead, relying on Rule 12.64 IR 2016 and paragraph 104 of Schedule B1, the judge made a number of declarations, including that:
- the appointment of administrators was effective as of 5.54pm on Friday 28 December; and
- if there was a defect in the appointment under the July 2018 PD, under paragraph 104 no act of the administrators was invalid despite such defect.
Whilst paragraph 8.1 of the July 2018 PD states that it is not possible to make “any” appointment of administrators out of court hours using the e-filing system, the reference to Rules 3.20 to 3.22, which only apply to an appointment by a QFCH, confuses the position. The judge in Wright had an opportunity to give clarity on the issue but did not do so. It is still therefore unclear whether it is possible for a company or its directors validly to appoint administrators by e-filing a NoA outside of Court hours. This anomaly will either need to be remedied by a revised practice direction or further case law and it is to be hoped that the issue will be resolved sooner rather than later to give clarity to those using e-filing, particularly given that the e-filing scheme has been extended to the Business and Property Courts outside of London and all new filings will have to be made using e-filing in those courts from 30 April 2019.