Section 236 (Emails): Opportunity v Oppression

The job of the liquidator is to:
– discover the truth of the company’s demise and report those findings to creditors; and
– get in, realise and distribute the assets of the company; and
– identify, discover and recover any undisclosed assets, such as causes of action capable of swelling the assets of the company.
To do this an essential feature is the requirement for information such as books and records, inclusive of electronic data such as emails. Section 236 of the Insolvency Act 1986 (along with Sections 234 and 235) enables the liquidator to enforce his or her rights to obtain information deemed to be required.
Often when seeking to source a company’s records a liquidator may be met with the irregularity that the company’s computers have been recycled, wiped, sold, deemed defunct, alleged to be in a state disrepair or considered insignificant by the directors.
For a director to adopt a careless approach to the company’s sources of information that are not stored on paper but on computers, then any destruction may open him or her up to the suggestion of offences covered by Section 387 of the Companies Act 2006 and or Section 208 of the Insolvency Act 1986 due to potential interference with the company’s property and information.
Emails are potentially one of the most useful sources of information available to a liquidator. Often it is overlooked that a liquidator enters office as a stranger and putting the jigsaw puzzle together is no simple task, particularly if faced with obstructive directors and perhaps even others who may have acted as professional advisers to the company employed under a contract for services, who may also display somewhat uncooperative tendencies.
In order to reconstitute knowledge of the company sunlight is the best disinfectant. Partial disclosure may not be all that much of greater assistance to no disclosure. That is why access to all of the available information to which the liquidator is entitled is usually reasonably required. Arguments regarding oppression in relation to a liquidator seeking disclosure of emails from the company, its directors or its agents appear difficult to promote given these are communications that the company will have historically been a party and will concern the company’s affairs, dealing and property. Further, an application under Section 236 of the Insolvency Act 1986 to enable a liquidator to obtain information has been held as not unreasonable by virtue of its inconvenience or that it will result in a substantial amount of work for the respondent (Re British & Commonwealth Holdings plc (No 2) [1993] AC 426; Green v BDO [2005] EWHC 2413 (Ch) at [30]).
How emails are a potential source of information generally is perhaps well summarised by Clarke J at paragraph [7] in the matter of Thema International Fund plc, Plaintiff v HSBC Institutional Trust Services (Ireland) Limited, Defendant and Thema Asset Management Limited and 2020 Medici AG, Third Parties  Kalix Fund Limited, Plaintiff v HSBC Institutional Trust Services (Ireland) Limited, Defendant;  Unione Di Banche Italiane Societa Cooperativa Per Azioni trading as UBI Banca, Plaintiff v Thema International Fund and HSBC Institutional Trust Services (Ireland) Limited, Defendants – [2012] 3 IR 528:
“…In an electronic age, it seems that the amount of materials produced has increased enormously. People communicate in emails and other forms of electronic communication in a way which leads to a record being kept in writing of those communications in circumstances where, perhaps, in the past a telephone call or face to face conversation with no permanent record might have sufficed. The way in which people communicate often leads to significant duplication of documents and the creation of complex strings of documents. Likewise, many aspects of the way in which modern financial business is conducted leads to the creation of a very large amount of data.”
How can the liquidator seek to use this information gathering opportunity to reconstitute knowledge of the company?
One answer to this may result from the Court of Appeal’s decision in Fairstar Heavy Transport NV v Adkins & Anor [2013] EWCA Civ 886 and the conclusions set out by Lord Justice Mummery in the matter of the appellant company being entitled to an order requiring its former Chief Executive Officer, after the termination of his appointment, to give it access to the content of emails relating to its business affairs. The relevant emails, which were stored on his personal computer in England, were sent or received by him on behalf of the company.
The key conclusions reached are set out below:
51. In brief, Fairstar is entitled to the relief claimed by it against Mr Adkins for the following reasons:
52. First, their former relationship had been that of principal and agent.
53. Secondly, as a general rule, it is a legal incident of that relationship that a principal is entitled to require production by the agent of documents relating to the affairs of the principal.
54. Thirdly, as Black LJ observed in the course of argument, “documents” may, depending on context, include information recorded, held or stored by other means than paper, as is recognised in the Civil Procedure Rules. In CPR 31.4 “document” means “anything in which information of any description is recorded” and “copy” means, in relation to a document, “anything onto which information recorded in the document has been copied, by whatever means and whether directly or indirectly.” Those follow the same definition used in legislation. According to the notes to CPR 31.4 ” While the word [document] in non-legal usage is commonly associated with information recorded only on paper, the true meaning of the word is far wider, reflecting its derivation from the Latin “documentum” referring to something which instructs or provides information. The term extends to electronic documents, including emails: see Practice Direction 31B, para 1″. In that context content cannot be separated from form, since a blank sheet of paper providing no information would not be a document and a blank electronic communication would not be an email.
55. Fourthly, materials held and stored on a computer, which may be displayed in readable form on a screen or printed out on paper, are in principle covered by the same incidents of agency as apply to paper documents. The form of recording or storage does not detract from the substantive right of the principal as against the agent to have access to their content.
56. Fifthly, as for the authorities cited to the judge and in this court on whether there can be property in confidential information, or whether there is property in the content of a letter, as distinct from the paper on which it is written, they relate to a point that does not need to be decided. Quite apart from the existence or non-existence of property in content, Mr Adkins was under a duty, as a former agent of Fairstar, to allow Fairstar to inspect emails sent to or received by him and relating to its business. The termination of the agency did not terminate the duty binding on Mr Adkins as a result of the agency relationship.
Comment: This judgment appears good authority that a liquidator can perhaps expect the Court may well come to his or her aid when seeking the relevant emails of a company’s agents, directors and those employed under a contract for services, in circumstances when the requested access to the emails is not initially met with the enthusiasm that the liquidator might reasonably require.

The aforesaid is not legal advice and is not to be relied upon as such. No liability is accepted by the writer for any reliance placed on the same. 
If you have a specific query then you should seek independent legal advice on the same.

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