Key Facts
- •Asertis Limited purchased claims from the liquidator of Solstice (SW) Limited against the Melhuishes and Bowman.
- •The liquidator obtained bank statements under section 236 of the Insolvency Act 1986.
- •The Respondents objected to the use of these bank statements in the subsequent litigation.
- •The court considered whether the liquidator could disclose documents obtained under section 236 to the assignee and whether the assignee could use them in litigation.
Legal Principles
Office-holders obtaining documents using compulsion powers are subject to an implied duty of confidentiality.
Hamilton v Navided (Re Arrows Ltd No 4) [1995] 2 AC 75 . 102; Marcel v. Commissioner of Police of the Metropolis [1992] Ch. 225
The duty of confidentiality is qualified; it cannot prevent the performance of statutory duties.
Re Arrows Limited, Soden v Burns [1996] 1 W.L.R 1512
Permission to use documents obtained under compulsion should generally be granted only if their use assists the beneficial winding-up of the company, or serves related purposes like bringing proceedings for fraudulent trading.
Re Esal (Commodities) Ltd (No 2) [1990] BCC 708
The purpose of section 246 ZD IA 1986 is to provide office-holders with an option to realize assets; it does not enable disclosure of confidential information to third parties.
Section 246 ZD IA 1986
While a liquidator has a duty to obtain the best realizations for creditors, they are not obliged to sell a cause of action.
Section 246 ZD IA 1986
Outcomes
The liquidator could disclose the documents to the assignee.
This is consistent with the purpose of allowing office-holders to sell causes of action to benefit the insolvent estate. Withholding information would hinder the sale process.
The assignee could use the documents in litigation, subject to redaction to protect personal information.
Balancing the interests of the respondents and the need for a fair trial, redaction of personal details is sufficient to protect privacy.
Permission from the court is usually required before providing confidential information to an assignee, though the office-holder and assignee may agree whether to seek such permission.
This ensures appropriate handling of confidential information obtained through statutory powers.