Insolvency - abandonment - creditors - distress - landlords - proof of debt - voluntary winding up
LCP Retail Ltd v Richard Andrew Segal: Ch D (Companies Ct) (Mr Justice David Richards): 4 August 2006



The appellant landlord (L) appealed against a registrar's order that the proceeds of sale of goods that had belonged to a company (P) be paid to the respondent liquidator (S).



L had executed a warrant for distress before P became the subject of a winding-up. In a letter dated 14 October 2003, L had requested that the company remove all goods from the premises without reference to its outstanding warrant of distress. L had also failed to make any reference to the distress in the proof-of-debt form that was sent out to creditors, which required L to specify any particulars of security held, as required under rule 4.75 of the Insolvency Rules 1986.



S sought directions as to whether the proceeds of sale should be paid to him or to L. The registrar held that L had abandoned its distress and that, in any event, it would be inequitable to allow it to proceed with the distress.



L submitted that the registrar had erred in law in determining that the distress had been abandoned, and that he had been wrong to place reliance on the letter of 14 October 2003 and the proof of debt as evidence of abandonment.



Held, the registrar's decision based on the facts that L had abandoned its distress had been correct. The liquidator, as convener of the creditors' meeting, had called for details of any matter specified in rule 4.75 of the 1986 rules. Those matters included particulars of any security, which L had failed to state in the proof-of-debt form.



The effect of rule 4.96(1) was that, by failing to disclose it in the proof-of-debt form, L had surrendered its distress for the general benefit of creditors. The court could relieve L from the effect of that rule, but only if satisfied that the omission was inadvertent or the result of honest mistake.



In the circumstances, the failure to state the distress in the proof-of-debt form was an evidence of an intention to abandon it, in the absence of inadvertence or honest mistake. The letter dated 14 October 2003 and the absence of protest were also consistent with an intention to abandon the distress. There had been no evidence from L as to the reasons for the omission of any reference to the distress in the proof-of-debt form, or for its failure to protest at the removal of goods or for the request to P to clear the premises. Accordingly, the registrar had been correct in determining that the distress had been abandoned.



Appeal dismissed.



William Hansen (instructed by Fraser Brown) for the appellant; Raquel Agnello (instructed by Stephenson Harwood) for the respondent.