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Ward Brothers (Malton) Ltd v Middleton EAT- 29 November 2013


This cases an interesting point on Reg 8(7) and when it is that a ‘transferor isunder the supervision of an insolvency practitioner’. 

Reg 8(7) provides:

(7) Regulations 4 and 7 do not apply to any relevant transfer where the transferor is the subject of bankruptcy proceedings or any analogous insolvency proceedings which have been instituted with a view to the liquidation of the assets of the transferor and are under the supervision of an insolvency practitioner

The Facts

B was a haulage company in financial difficulties. HMRC issued a winding up petition. On the Friday before that petition was due to be heard B ceased trading.   On the following Monday W started to perform B’s contracts using B’s employees, save for those who did not wish to work at the lower rates offered.  In the week before ceasing to trade B had been taking advice from an insolvency practitioner (IP).   At issue was whether at this point B was under the supervision of an IP.  If it was Regs 4 and 7 would not apply.   Administrators were formally appointed 10 days after B ceased to trade.

EAT Judgment

The parties both sought to persuade the EAT that it should identify a ‘red line’ at which point a transferor could be said to under the supervision of an IP.   The reason being the same as that in Key2Law LLP v De’Antiquis – namely that is the interests of those involved and their advisors if it can be clearly identified when Reg 8(7) is operative and when it is not.

HHJ Burke QC in reliance on the judgment of Elias P in Secretary of State for Trade & Industry v Slade [2007] IRLR 98 held that there was such a red line; in order for the transferor to be under the supervision of an IP that IP must have been appointed as a liquidator, provisional liquidator or administrative receiver as required by section 388 of the Insolvency Act 1986.


This decision has the benefit of certainty although as is recognised in the judgment they may still be factual disputes as to the time of the appointment.  For example, as to whether an insolvency practitioner was on the facts, appointed before a formal letter of appointment was provided or even drafted. 


Link to judgment








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