Case Nos: 3007, 3008 and 3009 of 2016
Neutral Citation Number: [2018] EWHC 360 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS & PROPERTY COURTS IN MANCHESTER
INSOLVENCY AND COMPANIES LIST (Ch D)
Manchester Civil Justice Centre,
1 Bridge Street West, Manchester M60 9DJ
Date: 26 February 2018 

Before:
HIS HONOUR JUDGE STEPHEN DAVIES 
SITTING AS A JUDGE OF THE HIGH COURT

IN THE MATTER OF TPS INVESTMENTS (UK) LIMITED (IN ADMINISTRATION)
AND IN THE MATTER OF THE INSOLVENCY ACT 1986

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Between:

	MARK GRAHAME TAILBY & 
TYRONE SHUAN COURTMAN (as joint administrators of TPS Investments (UK) Limited	

Applicants 	
	
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HUTCHINSON TELECOM FZCO	
Respondent
	
- and –

ABC BUSINESS CENTRES UK LIMITED (In Administration)
ABC ALPHA BUSINESS CENTRES VI LIMITED (In Administration)
ABC HNW LIMITED(In Administration) 
Interested Parties

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James Morgan QC (instructed by Howes Percival Solicitors, Leicester) for the Applicants
Avtar Khangure QC (instructed by Moore & Tibbitts Solicitors, Warwick) for the Respondent
Katie Longstaff (instructed by Nelsons Solicitors, Nottingham) for the Interested Parties

Hearing dates: 29 – 31 January 2018
Draft judgment circulated: 9 February 2018

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JUDGMENT
His Honour Judge Stephen Davies

Contents

A.	Introduction
B.	Parties and Background
C.	The relevant legal principles
D.	The joint administrators’ permission application and Hutchinson’s permission application
E.	The removal application
F.	Conclusions

A.	Introduction

1.	This case was listed for hearing over three days to determine four applications arising from the administration of the above-named company, TPS Investments (UK) Ltd (“TPS”) and one application arising from the administration of two connected companies, ABC Prop Co Holdings Ltd (“ABC”) and CP Investment Holdings Limited (“CP”).  The nature of those applications and the position as regards each application as at the present date is as follows.

2.	The first application in time is the application of the joint administrators of TPS (“the joint administrators”) under paragraph 71 of Schedule B1 to the Insolvency Act 1986 for permission to dispose of a property which is subject to security in favour of the respondent Hutchinson Telecom FZCO (“Hutchinson”), that property being commercial premises in Seaham known as Lighthouse View (“the joint administrators permission application”).  This application is no longer pursued because the joint administrators and Hutchinson have very recently agreed that Hutchinson will appoint a fixed charge receiver under its security over Lighthouse View, in circumstances to which I shall refer.  However, the costs of that application are very much in issue and it is agreed that I should determine the question of those costs, insofar as I am able, in this judgment.

3.	The second application in time is an application by the joint administrators in their capacity as administrators of ABC for declarations that charges granted by ABC in favour of Hutchinson over two further commercial promises, Caroline House in Bolton and Prospect House in Oldham are void for non-registration at Companies House (“the declaration application”).  This application was substantively determined by HHJ Pelling QC on 21 July 2017 when he also largely disposed of the resulting costs issues, so that the only remaining issue relates to the basis of assessment of those costs and to the costs of the hearing itself.  The parties are sensibly agreed that these relatively minor costs issues should be left over until after this judgment has been handed down.

4.	The third application in time is Hutchinson’s application under paragraph 43 of Schedule B1 for permission to enforce its security over Lighthouse View and another commercial property, Turnhouse Road in Edinburgh (“the Hutchinson permission application”).  This application so far as relates to Lighthouse View has been compromised as above, but it is still live as regards Turnhouse Road and again the question of costs as regards Lighthouse View remains live.

5.	The fourth application in time is Hutchinson’s application under paragraph 88 of Schedule B1 for an order for the removal of the joint administrators (“the Hutchinson removal application”).  This is also very much live.

6.	The fifth and final application in time is an application by the interested parties, being the administrators of a company known as ABC Alpha Business Centres UK Limited (“Alpha”) and two other associated companies seeking permission to be heard in these proceedings (“the Alpha permission application”) in order to support the joint administrators.  This application was disposed of by consent on day 1 of the hearing on the basis of Hutchinson giving an undertaking to give 21 days’ notice to the Alpha administrators of any proposed sale of Lighthouse View and/or Turnhouse Road for a period of 3 months, with costs being reserved.  

B.	Parties and Background

7.	There are a number of different companies which feature in this case, some incorporated in the UK and others in Dubai, and the inter-relationship between some of them is neither completely clear nor free from dispute.  For present purposes I can summarise as follows, assisted by the structure chart helpfully produced by Mr James Morgan QC, counsel for the joint administrators with his written opening, albeit that it is not – as Mr Avtar Khangure QC counsel for Hutchinson emphasised – an agreed document.

8.	The starting point is that TPS is a UK registered and a wholly owned subsidiary of a Dubai registered company known as The Property Store FZE.  It was incorporated on 16 August 2013 and went into administration on 11 November 2016, its administrators being Mr Mark Tailby of MT Insolvency and Mr Tyrone Courtman of PKF Cooper Parry.  Its director at the point of administration was Mr Abdulrahim Mohammed (“Mr Mohammed”).  It was said in the joint administrators’ statement of proposals that it was one of several associated companies which carried out the business of purchasing, renovating, letting and selling UK properties to manage funds for investors who had invested in a series of UK issued investment bonds, where the funds were provided to companies in the UAE associated to TPS.  

9.	TPS was the owner of the 4 properties referred to above which are material to this case and remains the owner of 2 of those properties, namely Lighthouse View and Turnhouse Road.  Prospect House and Caroline House were transferred by TPS to ABC and the car park at Caroline House was transferred by TPS to CP, all in circumstances which are in dispute.  

10.	Hutchinson contends that it advanced the funds to TPS which were used to acquire those 4 properties and that it was given all monies legal charges over those 4 properties to secure that lending.  That basic proposition is not disputed by the joint administrators, however there are issues which the joint administrators say that they are reasonably unable currently to determine as to the source of the funds advanced by Hutchinson and also as to the amount still due to Hutchinson.  The joint administrators also do not accept that Hutchinson has shown that TPS gave it legal charges over Prospect House or Caroline House.

11.	As to the former, it is the case of the Alpha administrators that the funds were provided by Alpha to Hutchinson.  In their statement of proposals they say that TPS was incorporated for the purpose of holding investment property in the UK using funds provided by Alpha from bonds which Alpha had issued to a number of individual investors.  They say that Alpha was a joint venture between TPS Investments Ltd (“TPS Dubai”), another Dubai registered company a director of whom was a Mr Mohammed Yusuf (“Mr Yusuf”) and Best Group Ltd, a UK registered company engaged in the investment business, the directors of whom were Mr Jeff Hankin and Mr James Bradley.  They say that Alpha advanced funds to its Dubai registered parent company, Alpha LLC, for Alpha LLC to invest in property in Dubai and, subsequently, in the UK.  They say that those funds were used to enable TPS to acquire the 4 properties in question.

12.	Having been transferred to ABC and CP, Caroline House and Prospect House and the Caroline House car parks were ultimately sold by the joint administrators in their capacity as administrators of those companies.  Prospect House was sold for £875,000; Caroline House was sold for £350,000 and the Caroline House car park was sold for £100,000.  It is common ground that although ABC and CP gave Hutchinson charges over the properties as part of the transaction in question those charges were void for non-registration with Companies House.  There remain however issues as to the consequence of these events.  In particular there are issues as to whether or not the joint administrators may be entitled to have the transfers set aside as transactions at an undervalue (“the TUV claims”), whether or not the effect of those transactions was to novate any liability which TPS might have had to Hutchinson for the monies originally advanced to TPS to acquire those properties to ABC, and whether or not in such circumstances Hutchinson could claim to be an unsecured creditor as against ABC.  By the time of the hearing it was rightly accepted by both parties that these are issues of some factual and legal complexity which cannot be determined without further factual investigation and, if necessary, judicial determination.         

13.	As already foreshadowed, it is common ground that the funds which were actually used by TPS to acquire these properties were advanced to TPS by solicitors who had been placed in funds for that purpose by Hutchinson, which is a Dubai registered company whose director is also Mr Karim.  It is also not disputed that TPS gave Hutchinson charges over Lighthouse View and Turnhouse Road and it is this security which Hutchinson seeks to enforce as against TPS in its permission application.  

14.	However it is asserted by the Alpha administrators as against the Joint Administrators  that these funds were provided by Alpha LLC and that they were impressed with a trust in favour of Alpha so that the properties are also impressed with a trust and so that Alpha is entitled to assert beneficial ownership of those properties or (in the case of Caroline House and Prospect House, their proceeds) (“the Alpha trust claim”)  This claim was first formally asserted in a letter dated 31 March 2017.  The background is that it appears from what is said by the Alpha administrators that there has been a falling out as between Mr Yusuf on the one hand and Mr Hankin and Mr Bradley on the other and that neither Alpha LLC nor TPS Dubai has been willing or able to repay Alpha and through Alpha the investors the sums due to them.  Thus the Alpha administrators are seeking to recover the monies invested through a number of various avenues, including the Alpha trust claim. 

15.	Hutchinson has said through its solicitors, Moore & Tibbitts, in the fourth witness statement of Mr Koolhoven at paragraph [11] that it is “adamant that the funds loaned to [TPS] were its own funds”.  It has not however provided any more specific evidence, documentary or otherwise, as to the source of the funds.  It is clear from the evidence which has been produced in relation to the Alpha application and generally that there are significant disputes as to the source of the funds, the circumstances in which the funds came to be provided, whether or not they were impressed with a trust enforceable by Alpha and if so against who and what.  It is also clear from the witness statements of Alpha’s solicitor that its investigations are still in their infancy, so that in the absence of agreement there is no realistic prospect of these issues being resolved by judicial determination at any time in the near future.  It is common ground that it is not for me to make such a determination and I am satisfied that it would be wrong for me to do so or to speculate in that regard.

16.	The immediate cause of TPS entering administration in November 2016 was said in the statement of proposals to be that the company had insufficient cash flow.  The joint administrators’ proposals in summary were that although there was no prospect of rescuing the company as a going concern there was a prospect of improving the position for all creditors, secured and unsecured, by undertaking a sale of the remaining property through administration as opposed to liquidation and, even if that was not reasonably practicable, the properties could be realised to make a distribution to the secured creditors.  I will refer to the basis for the belief that there was a prospect of improving the position for all creditors by the joint administrators selling the remaining properties in more detail later in this judgment. 

17.	Since Hutchinson was a secured creditor but did not have the benefit of a qualifying floating charge it was not entitled to be notified by Mr Mohammed of his intention to appoint administrators.  It was however aggrieved that it was not notified at least informally and, hence, lost the opportunity to appoint a fixed charge receiver prior to the administration taking effect and hence before the moratorium upon the enforcement of security without the agreement of the administrators or the permission of the court took effect.  In December 2016 its solicitors wrote requesting that the joint administrators agreed to its enforcing its security but, following further discussions, by February 2017 its solicitors had informed the joint administrators that they were recommending to their client that it should agree to the joint administrators selling Lighthouse View on mutually agreed terms.  However Hutchinson did not in fact agree to this proposal and by April 2017 there was a lack of any agreement and an impasse between the parties as to the way forward.  It is unnecessary to refer in detail to all of the correspondence passing between Hutchinson through its solicitor Mr Koolhoven of Moore & Tibbitts, and the joint administrators and their solicitor Mr Mifflin of Howes Percival.  

18.	By 25 May 2017, when the joint administrators’ permission application was issued, the position in summary was that:

18(i)	The joint administrators had, through a valuer instructed by them, obtained a prospective purchaser for Lighthouse View and were extremely keen to sell Lighthouse View to that purchaser, a company known as Crowther for £300,000, which both they and their valuer considered to represent a good outcome.  The joint administrators were concerned, not without reason given what they were being informed by their valuer, that if matters dragged on Crowther would lose interest and walk away and they would experience real difficulties in securing another sale either at all or at the same price.   

18(ii)	However Hutchinson was unhappy with a sale at that price and asserted, although without producing evidence to back up their assertion, that if they appointed a fixed charge receiver a better return could be achieved, especially if they were able to obtain the freehold so as to be able to dispose of the freehold rather than simply the long leasehold title which TPS currently held.  Hutchinson was also unhappy with the 5% fee which the joint administrators had agreed with the creditors of TPS they could take from the proceeds of sale of Lighthouse View in addition to the expenses of sale.  Hutchinson asserted, although again without producing evidence in support, that they could negotiate a lesser fee with a fixed charge receiver.  

18(iii) The joint administrators also wished to develop proposals for the sale of Turnhouse Road.  They were informed by their valuer that the prop was valued at £4M as was but that it might be possible to improve its value – seemingly by obtaining planning permission – by anything up to £2.3M to produce a value of £6.3M.  The difficulty for the joint administrators however was that in the absence of funds they were in no position to undertake the work necessary to improve its value.  It is clear that they were keen to persuade Hutchinson to agree to a proposal under which the net proceeds of Lighthouse View could be used for this purpose.  It is clear that the joint administrators believed that not only might this result in Hutchinson being repaid in full but also the unsecured creditors receiving a return as well.  It is also clear that the joint administrators would be entitled under the proposals agreed by the creditors to receive 5% on the sale price.  However, once it became clear that Hutchinson was not prepared to agree to the joint administrators selling Lighthouse View it was also abundantly clear that there was no prospect of it agreeing to allow the joint administrators to sell Turnhouse Road let alone of using the net proceeds of Lighthouse View to expend on enhancing the sale value of Turnhouse Road.

18(iv) The joint administrators were also concerned that they would be potentially exposed to a claim from the Alpha joint administrators should they agree to Hutchinson appointing fixed charge receivers and obtaining the net proceeds of sale in relation to Lighthouse View and/or Turnhouse Road.  In particular, since Hutchinson was a company registered in Dubai without assets within the jurisdiction their concern was that if Alpha successfully established their trust claim and that it had priority over Hutchinson’s security but was unable to enforce that claim in circumstances where the joint administrators had allowed Hutchinson to obtain possession and control over the properties and hence to dispose of them without accounting for the net proceeds they might be vulnerable to a claim by the Alpha joint administrators for conversion or some such similar legal wrong.  In order to achieve their objective of selling Lighthouse View and of protecting themselves they had proposed that they should sell Lighthouse View and place the net proceeds in an escrow account pending the determination of the competing claims as between Hutchinson and the Alpha joint administrators, but Hutchinson was not willing to agree to this as a solution.

18(v)	The other main bone of contention related to Caroline House and Prospect House.  The joint administrators in their capacity as administrators of ABC and CP were in the process of selling these properties but, in order to do so, needed Hutchinson to relinquish their charges over those properties on the basis that the charges were void due to non-registration at Companies House.  Whilst Hutchinson had accepted that the charges were void they were unhappy about what they perceived to be the joint administrators dilatory approach to acknowledge that in the circumstances TPS had a straightforward and unanswerable TUV claim against ABC and CP which would result in the net proceeds of sale being recoverable by TPS and, they might contend, held by TPS effectively on trust for Hutchinson.  They were also unhappy about the joint administrators’ intention – in their capacity as joint administrators of ABC and CP – to take payment of their approved fees from the net sales proceeds of those properties.  They required the joint administrators to agree not to do so failing which they refused to consent to relinquish their charges.  This stance in due course led to the declaration application which, as I have said, was disposed of substantively by HHJ Pelling QC adversely to Hutchinson in July 2017 but was still very much a bone of contention in May 2017.      

19.	As well as making the Hutchinson permission application in July 2017 Hutchinson also made the removal application.   The basis for the removal application was Hutchinson’s contention that the joint administrators were in a position in relation to the TUV claim where their duties as joint administrators of TPS conflicted with their duties to ABC and CP.   

20.	That is a sufficient summary of the essential circumstances.  Whilst it would be possible to devote many more paragraphs and pages of this judgment to rehearsing the detail of the chronology of events both prior to and during the course of the applications and the detail of the competing arguments as to the TUV claim and the Alpha trust claim I do not consider that the benefit to be gained would outweigh the resultant delay in the production of this judgment, so that I make further reference to the facts only to the extent that it is necessary to do so fairly in order to determine the outstanding issues which I must determine.    

The relevant legal principles

21.	I begin by referring briefly to the relevant legal principles applicable to the applications, starting – as did both Mr Khangure and Mr Morgan - with some preliminary observations as to the purposes for which administration orders may be which, it is said, ought to inform the approach which I should take to these applications.

22.	First and foremost it is well-known that there are 3 legitimate objectives or purposes of administrations which are contained in paragraph 3 of Schedule B1 in a descending hierarchy, viz: (a) rescuing the company as a going concern; (b) achieving a better result for the company’s creditors as a whole than would be likely if the company were wound up (without first being in administration); (c) realising property in order to make a distribution to one or more secured or preferential creditors.  In each case the emphasis is on promoting the interests of the creditors as a whole rather than just one class, for example the interests of secured creditors as is the case in relation to receivership.

23.	Second it is well-known that by paragraph 11 of Schedule B1 an administration order may be made where the court is satisfied that such an order is “reasonably likely to achieve the purpose of administration”.  It is only necessary to show a real prospect, in circumstances where all of the relevant circumstances are not known at the time.  This is relevant when considering Mr Khangure’s criticism of the circumstances in which the application for an administration order was made.

24.	Third, as regards the joint administrators permission application made under paragraph 71 of Schedule B1, this permits the court to allow an administrator to dispose of property subject to security only “where the court thinks that disposal of the property would be likely to promote the purpose of administration in respect of the company” and then only on condition that “(3) there be applied towards discharging the sums secured by the security - (a) the net proceeds of disposal of the property”.

25.	I was referred by Mr Khangure to the judgment of Mr Richard Snowden QC (as he then was) in Re Capitol Films Ltd [2010] EWHC 3223 (Ch) where he was considering how an application under paragraph 71 should be approached in a case – which Mr Khangure contends is this case - where the unsecured creditors have no interest in the matter.  At [35-37] he said this:

“35.	In my judgment, the acknowledgment by the Administrators in March 2010 that there was unlikely to be a payment in full to the secured creditors (and indeed, that all of the assets to be sold would be covered by fixed charges) had significant consequences for the manner in which the Administrators ought subsequently to have approached any application under paragraph 71.Paragraph 71 gives administrators of a company an important and valuable power to apply to the court for permission to sell assets subject to fixed charges as if they were not subject to those charges.  This possibility is a significant interference with the rights of the holders of fixed charges to realise their security at a time and in a manner of their own choosing.  It is accordingly subject to a number of safeguards and conditions, the most obvious of which (apart from the need to seek a court order itself), are the conditions (i) that the court needs to be satisfied that the disposal of the property would be likely to promote the purpose of the administration in respect of the company (see paragraph 71(2)(b)), and (ii) that the net proceeds of the disposal of the property, together with any additional amounts needed to bring those proceeds up to market value, are paid towards discharging the secured debt (see paragraph 71(3)).

36.	In a typical case, an application might be made by an administrator under paragraph 71 in order to achieve a sale of a company’s business as a going concern, thereby fulfilling the purpose of achieving a better result for creditors as a whole than would be likely if the company was wound up.  If, for example, a company operates from premises which are subject to a fixed charge, the administrator may wish to sell the business as a going concern and in situ, and will need to be able to convey the premises free of the fixed charge in order to do so.  In such a case, an order of the court necessarily involves a balancing exercise.  On the one side are the interests of the holder of the fixed charge, who has rights to seek a sale of the charged property for himself and may, for example, prefer a deferred sale with vacant possession.  On the other side are the interests of the holders of floating security and the unsecured creditors, who are likely to benefit from an immediate sale of the business as a going concern.  The administrator seeking an order under paragraph 71, and the court in considering whether to make it, will be required to balance the prejudice that will be felt by the secured creditor if the order is made, against the prejudice that will be felt by those interested in the promotion of the purposes specified in the administration order if it is not: see Re ARV Aviation Ltd [1989] BCLC 664 at 668h-i per Knox J.

37.	In the instant case, however, where the sole purpose of the administration was to achieve a return to secured creditors, where the Administrators took the view that all of the assets to be sold were covered by fixed charges and that those secured creditors would not be repaid in full, and where the Company had no continuing business as such, the reality was that in seeking to sell the Company’s rights in respect of the films, the Administrators had no, or no material, constituency to serve other than the secured creditors.  In my view, the Administrators’ attitude towards the secured creditors and their approach to any sale proposals leading to an application under paragraph 71 ought to have reflected that fact.” 

26.	Mr Morgan did not quarrel with these observations.  His primary submission was that the joint administrators’ permission application did justify the purpose of achieving a better result for the company’s creditors as a whole, since this is not a case – unlike Capitol Films – where it can be said that the only purpose is to realise property to make a return to secured creditors.  His fall-back submission was that even if that was the only purpose nonetheless the joint administrators still had – given the potential interest of Alpha via its Trust claim in Lighthouse View and Turnhouse Road – a legitimate interest in ensuring that Lighthouse View was disposed of so as to maximise the return to the secured creditors.  Put colloquially it was not a case where it could be said that the joint administrators had no business in interfering with Hutchinson’s desire to realise its security as and how it chose, even if that might involve Hutchinson recovering less than it would if it allowed the joint administrators to do it for them.  

27.	The Hutchinson permission application is made under paragraph 43(2) of Schedule B1 which provides that “No step may be taken to enforce security over the company’s property except– (a) with the consent of the administrator, or (b) with the permission of the court.

28.	The principles governing exercise of discretion by the court were set out by the Court of Appeal in Re Atlantic Computer Systems plc [1992] Ch 505 in 12 numbered paras to which I have been referred.  They are summarised in Sealy & Milman’s Annotated Guide to the Insolvency Legislation 20th 2017 edition as follows:

(1) 	The person seeking leave has always to make out a case.

(2) 	If granting leave to an owner of land or goods to exercise his proprietary rights as lessor and repossess his land or goods is unlikely to impede the achievement of the purpose of the administration, leave should normally be given.

(3) 	In other cases where a lessor seeks possession, the court has to carry out a balancing exercise, weighing the legitimate interests of the lessor against those of the company’s other creditors.

(4) 	In carrying out the balancing exercise, great importance is normally to be given to the lessor’s proprietary interests: an administration for the benefit of unsecured creditors should not be conducted at the expense of those who have proprietary rights.

(5) 	It will normally be a sufficient ground for the grant of leave that significant loss would be caused to the lessor by a refusal. However if substantially greater loss would be caused to others by the grant of leave, that may outweigh the loss to the lessor caused by a refusal.

(6)–(8) These paragraphs list the various factors to which the court will have regard in assessing the respective losses under heading (5). These include: the financial position of the company, its ability to pay the interest, rentals or other charges (both arrears and continuing charges), the administrator’s proposals and the end result sought to be achieved by the administration, the period for which the administration has already been in force and that for which it is expected to continue, the prospects of success of the administration, the likely loss to the applicant if leave is refused, and the conduct of the parties.

(9) 	The above considerations may be relevant not only to the decision whether or not to grant leave, but also to a decision to impose terms if leave is granted.

(10) 	The court may, in effect, impose conditions if leave is refused (for instance, by giving directions to the administrator), in which case the above considerations will also be applicable.

(11) 	A broadly similar approach will apply in many applications for leave to enforce a security.

(12) 	The court will not, on a leave application, seek to adjudicate upon a dispute over the existence, validity or nature of a security unless the issue raises a short point of law which it is convenient to determine without further ado.

29.	I was also referred by Mr Khangure to the decision of Martin Mann QC in re UK Housing Alliance (North West) (in admin) [2013] EWHC 2553 (Ch) where, drawing a similar distinction to that drawn in Capitol Films with a case where the interests of the unsecured creditors were relevant, he said at [75] that the court was required to balance the interests of the secured creditors and unsecured creditors only if the relevant property was required for the purposes of the administration.

30.	I was also referred again to Capitol Films where helpful guidance was given as to the relevant principles governing the exercise of the court’s discretion in relation to costs in relation to applications both under paragraph 43 and under paragraph 71.

31.	The Hutchinson removal application is made under paragraph 88 of Schedule B1, which empowers the court to remove an administrator from office.  

32.	Since the primary basis for the application in this case is said to be the actual conflict which exists between the joint administrators’ position as administrators of TPS and as administrators of ABC and CP respectively Mr Khangure began his submissions by referring me to general law outside the confines of insolvency cases, which he submitted was succinctly stated in the judgment of Lord Millett in Prince Jefri Bolkiah v KPMG [1999] 2 AC 222 at p234H-235A where he said that:

“… where the court's intervention is sought by an existing client ... a fiduciary cannot act at the same time both for and against the same client, and his firm is in no better position. A man cannot without the consent of both clients act for one client while his partner is acting for another in the opposite interest. His disqualification has nothing to do with the confidentiality of client information. It is based on the inescapable conflict of interest which is inherent in the situation.”

33.	Hutchinson’s case is that it is simply seeking to ensure that the joint administrators, who are – as Mr Khangure submitted and as is common ground – in the position of fiduciaries vis-à-vis TPS, do not breach their fiduciary duty to TPS by acting both for TPS and for ABC and CP in circumstances where their duties to both conflict with each other.

34.	Mr Morgan’s submission is that the authorities demonstrate that the strictness of this principle is moderated in appropriate cases where there is a potential or even an actual conflict where an insolvency professional is appointed as liquidator or administrator of a number of different related companies.    His position was set out in paragraph 38 of his skeleton argument as follows:

“The law was helpfully reviewed by Warren J in SISU at [91]-[120] and considered by the Privy Council in Parmalat Capital Finance Ltd v Food Holdings Ltd [2008] BCC 371 and Newey J in Re York Gas Ltd [2011] BCC 447. The considerations / principles may be summarised as follows:
a.	In the context of large group insolvencies, the appointment of a common office-holder is prima facie likely to be in the interests of the general body of creditors for it will be more efficient and less costly: SISU at [103];
b.	This approach is not limited to large group insolvencies and it is not unusual for office-holders to be appointed to related companies, even though the dealings between them may throw up a conflict of interest, as it also avoids expense: SISU at [105]; Parmalat at [13];
c.	The courts have approached the issues of such conflicts in a common sense and pragmatic way (i) noting that licensed insolvency practitioners are professional men who are well used to dealing with conflicts, (ii) in general it is in the interests for there to be a single office-holder and for any conflicts to be managed if and when necessary, (iii) a variety of approaches may be taken to managing conflicts and (iv) these may include taking independent legal advice, the appointment of an additional partner from the same (or a different) firm: SISU at [103]; York Gas at [11]-[17];
d.	They may also include applying to the court for directions: Parmalat at [13]-[16];
e.	If the correct approach is to allow individuals to act where there is a potential conflict, but to ensure that the conflict is managed if and when it becomes an actual conflict, an existing actual conflict of interest should not preclude an appointment rather than providing for it to be managed – assuming that it can be: SISU at [108] & [115];
f.	If an actual conflict arises then the management must be put place immediately, if it can be, or if it cannot be, then the office-holder will have to relinquish one (or all) of his conflicting appointments: SISU at [112];
g.	Even if the conflict concerns the office-holders’ interests in their personal capacities in securing payment of their fees, it may be possible to deal with that actual conflict by management of the type described above: Parmalat at [16].”

35.	In his submissions Mr Khangure argued that this moderating principle should only be applied in the type of situation exemplified by Sisu itself, namely large scale multi-national groups of companies where the benefit of taking a practical approach could clearly be demonstrated.  Mr Morgan submitted that there was no basis, whether in the authorities or in principle, for limiting this moderating principle to such cases, and I agree.  Indeed, it could well be said with some force that the justification for taking a pragmatic moderating approach applies equally if not more strongly where there are a smaller number of smaller companies and where the value of the available assets means that cost considerations come even more sharply into focus.

36.	Mr Khangure also argued that the principle could have no application to cases of actual, as opposed to potential, conflict.  In support of this argument he sought to place reliance on the views expressed by the authors of “Conflicts of Interest”, Mr Charles Hollander QC and Mr Simon Salzedo QC, in the 5th edition of that work at 17-020 to 022.  The authors begin this section of their work at 17-016 by noting the pragmatic approach usually taken by the courts in insolvency cases “by placing considerable emphasis on the stage at which the application to remove … is made and the efficacy of possible solutions short of removal”.  In the particular section in which they discuss the position of office holders of related companies with conflicts between the different companies, after referring to a number of authorities, both from this jurisdiction and overseas they appear to suggest that the approach which ought to be adopted in this jurisdiction, by reference to the decision in Sisu, is that where an actual conflict arises the office holder ought to apply to the court for a discharge of one of his competing positions.  However, as Mr Morgan submitted, that suggestion is inconsistent with what Warren J said in Sisu at [108] and [112], where he rejected the submission that a different approach should apply as between potential and actual conflicts and said this:

108.	… if the correct approach is to allow the same individuals to act where there is potential conflict but to ensure that the conflict is managed if and when it becomes an actual conflict, I do not see why an existing actual conflict should preclude an appointment rather than providing for it to be managed – assuming of course that it is capable of being effectively managed.” 

112.	 … Where there is already an existing conflict, the management must be put in place immediately, if it can be, or if it cannot be, then the administrator will have to relinquish one, if not both (or more), of his conflicting positions …” 

37.	In my judgment Mr Morgan is correct when he submits that the authorities do not show that the existence of an actual conflict must inevitably lead to the relevant office-holder having to relinquish his appointment.  It must all depend on the particular circumstances including: (a) the nature and extent of the conflict (clearly different considerations will apply where the investigation is still at an early stage to those where litigation is already in prospect); (b) the point at which the question is being considered (clearly different considerations will apply when the officeholder has not been appointed to those where he has been in position for some time); (c) whether and if so how the conflict can properly be managed at that time and – insofar as can be known – at a future stage; (d) the consequences for and against removal both in terms of time and cost and more generally. 

38.	Finally, I should refer briefly to the relevant principles which apply where the parties have compromised the substantive dispute but, being unable to agree on costs, invite the court to do so.   The relevant principles in relation to costs after settlement in ordinary civil litigation are summarised in the judgment of the Master of the Rolls in M v London Borough of Croydon [2012] EWCA Civ 595 at [47] - [51].  In each individual case the court has to decide whether or not it is in a position to make a determination in relation to costs, having regard to such relevant factors as the nature of the issues in the case, the terms of the compromise, whether or not it is clear from the terms of the compromise who was the successful party and whether or not the question as to who would have succeeded had the action been contested down to trial can fairly be determined with confidence without disproportionate time and effort and cost being spent on that exercise.  Here, Hutchinson says that under the compromise it has successfully defended the joint administrators’ permission application and has obtained the relief which it sought on its own permission application, so that it is a clear case where it should have its costs.  In contrast the joint administrators contend that they only compromised on those terms in consequence of recent developments entirely unconnected with the substantive merits and, had those events not occurred and the case been contested to trial, then either it can be determined that they would clearly have succeeded, so that they should have their costs or, alternatively, at the very least the position is not clear cut either way and so that there should be no order as to costs as between the parties.     

D.	The joint administrators permission application and the Hutchinson permission application

39.	Although counsel suggested that I might more conveniently deal with the removal application first, in my view it is helpful to deal with the permission applications first since: (a) much of the ground covered in relation to these applications is relevant, or said to be relevant, to the removal application; (b) it is at least possible that my decision in relation to the permission applications is of some relevance to the removal application.

40.	I address the permission applications under the following sub-headings:
(i)	Does Hutchinson have valid security over Lighthouse View and/or Turnhouse Road and if so for what indebtedness?
(ii)	What purpose of the administration would have been served by allowing the joint administrators to have conduct of the disposal of Lighthouse View and what purpose of the administration would be served by allowing the joint administrators to have conduct of the disposal of Turnhouse Road? 
(iii)	The relevance of the Alpha trust claims.
(iv)	The joint administrators’ costs and expenses.
(v)	Application of Atlantic Computers guidelines.
(vi)	Conclusions in relation to the permission applications.

(i)	Does Hutchinson have valid security over Lighthouse View and/or Turnhouse Road and if so for what indebtedness?

41.	It is common ground that Hutchinson has the benefit of security over Lighthouse View and Turnhouse Road.  TPS granted an all-monies legal charge over Turnhouse Road on 17 October 2014 and a further all-monies legal charge over Lighthouse View on 21 April 2015.  There has never been any challenge to the validity of these charges nor any dispute about their registration.  Although the joint administrators have expressed themselves at certain stages in terms which suggested that the validity of the security was still under review, I am satisfied that they were never intending to assert that there was a question mark over the validity of the charges as effective charges, only as to what indebtedness was secured and whether it ranked in priority to any claim asserted under the Alpha trust claims.

42.	I address first the issues argued as to the extent of the indebtedness secured by the legal charges.  

43.	Hutchinson’s primary position had been that the principal amount due to it and secured by the legal charges amounts to £6,488,867.  This is based on the details provided in a letter written by DWS solicitors, the transactional solicitors instructed by TPS, to Moore & Tibbitts on 1 June 2017 where they confirmed that they had received seven separate payments totalling that amount which were used towards property transactions by TPS.

44.	In contrast, the joint administrators’ primary position had been that the amount established as due to absence and was no more than the amount referred to in the initial witness statement and statement of assets and liabilities produced by Mr Mohammed, which was only £3,527,207 for Hutchinson.   

45.	Mr Morgan submitted that on the face of the letter from DWS the amount should be reduced by £868,300, because DWS stated that in relation to the first two transfers the properties were subsequently sold and proceeds of sale refunded to Hutchinson on completion. Although Mr Khangure submitted that what was said by DWS in relation to the second transaction was clearly wrong, because it referred to Prospect House which – it was common ground – had not been sold until the ABC administrators were appointed, it seems to me to be plain or at least reasonably arguable – as Mr Morgan submitted – that this was a mistaken reference by DWS to Prospect House rather than to another property, especially since Hutchinson was putting this letter forward as accurate and has not advanced any evidence to explain the precise position if, as it said, this part of the letter could be discarded as inaccurate. 

46.	As Mr Khangure observed, this still left a sum of £5,620,567 as having been advanced by Hutchinson to TPS and not repaid.  Mr Morgan suggested that the final payment of £226,739 should also be disregarded, since DWS stated that this related to the purchase of a car park that became abortive. However, since DWS also stated that the net funds were transferred to TPS’ bank account upon Hutchinson’s instructions, that submission did not seem to me to be well founded.

47.	In oral submissions Mr Morgan contended that there was also a question mark as to the third and fourth payments, totalling £1,361,792, which he said referred to the amounts advanced to acquire Caroline House and Prospect House. His submission was that the circumstances in which these properties were transferred to ABC, with ABC giving charges to Hutchinson over those properties to secure monies due from ABC to Hutchinson, were only consistent with any liability due from TPS to Hutchinson in this respect being novated to ABC.  If that was right, or at least arguably right, then the principal amount due to Hutchinson would reduce still further to £4,258,775. This submission was that there would have been no commercial purpose in ABC giving charges to Hutchinson unless ABC had also taken over any previous liability which TPS had to Hutchinson for the sums advanced to acquire these properties. Responding to this submission Mr Khangure drew my attention to the revised statements of affairs produced in relation to TPS, ABC and CP in May 2017, which recorded TPS as being an unsecured creditor of ABC and CP in the total sum of £1,221,283 which, he submitted, was only consistent with TPS remaining liable to Hutchinson for the amounts advanced to acquire these properties, whatever additional obligation ABC may have taken on as against Hutchinson in this regard. In my judgment the position is insufficiently certain for me to make any confident determination of this point at this stage. There is clearly documentary evidence, to which I was referred by Mr Morgan, which indicates that Hutchinson was involved with and aware of the transactions by which these properties came to be transferred to ABC and charges granted by ABC to Hutchinson, but the full picture cannot yet be discerned from the documentation currently available and neither party has produced an account in evidence from those primarily involved at the time from which the position can conclusively be determined.

48.	The joint administrators had originally, as I say, started from the proposition that the amount stated in the statement of affairs, namely £3,527,207, was the most which could safely be accepted as due.  It was submitted by Mr Khangure that this was on any view too low because – as appeared from the summary balance sheet produced by TPS – there had been a significant reduction from the previous year, consistent with a similar reduction in the value of the fixed assets.  He submitted that this must have been on the erroneous basis that following the transfer of Caroline House and Prospect House to ABC these amounts were written off which, as he submitted, was plainly wrong.  This is the same point which I have already considered.  However, this does raise the further question whether the figure of £3,527,207is correct, or arguably correct, as a starting point, or whether based on the DWS letter the only realistic starting point is £4,258,775.  The difficulty for the joint administrators is that there is no supporting evidence, whether documentary or information provided by Mr Mohammed or anyone else, to explain how this amount was arrived at when set against the clear evidence from DWS as to the amounts advanced.  It does not appear that the joint administrators have been able to obtain any assistance from Mr Mohammed in relation to these matters because he has, I understand, for some time been in a serious medical condition.  Again the difficulty is that neither party has been able to provide me with a clear statement of account, supported by clear evidence, which would enable me to conclude with confidence what the position is one way or another.

49.	It follows, I accept, that the principal amount advanced by Hutchinson to TPS might be as little as £3,527,207, or it might be £4,258,775 or £5,620,567 or even £6,488,867.  I suspect that the lowest and the highest of those four possibilities are unlikely, but I cannot rule them out.  It is perhaps surprising that there should be this amount of uncertainty, but nonetheless that is the position.

50.	However, Mr Khangure had a further submission, which was that – as is common ground – the loan agreements entered into as between Hutchinson and TPS contained provision for interest to be charged at 7% per annum, rising to 10% per annum in the event of default. It is submitted that in circumstances where there is no evidence of any repayment having been made by TPS, other than the repayments referred to in the letter from DWS, there must on any view be a substantial amount of interest also due and owing to Hutchinson and covered by the security given by TPS which was, he reminded me, in all-monies form.  Although Mr Morgan observed that there was no direct evidence from Hutchinson as to the statement of account as between it and TPS, so that there was no clarity as to whether interest had been applied and, if so, on what basis and over what periods and in what amounts, he was unable to point to any specific reasons as to why the amounts secured should not include interest. Looking at the matter in round terms, even if the principal amount due was only £3,527,207, given that the funds were advanced over a period from October 2013 to September 2015 it is apparent that there must at all times, and still is, a substantial liability in relation to interest secured by the charges held by Hutchinson over Lighthouse View and Turnhouse Road.  If, as a minimum, one applied interest at 7% from 31 August 2016, by the end of February 2018 there would be a further 10.5% interest to be added which would bring the £3,527,207 up to circa £3,897,500. As at the end of May 2017 when the joint administrators made their application there would have been 5.25% interest bringing the £3,720,830 up to circa £3,712,500.

(ii)	What purpose of the administration would have been served by allowing the joint administrators to have conduct of the disposal of Lighthouse View and what purpose of the administration would be served by allowing the joint administrators to have conduct of the disposal of Turnhouse Road?

51.	Mr Khangure began his submissions by criticising the decision to put TPS into administration in November 2016.  He complained that administration was never an appropriate course where TPS was a non-trading company with no employees and only two assets both of which were fully secured to Hutchinson.  Although he accepted that there was no obligation to give Hutchinson notice of the administration he submitted that informal notification would have been expected and that the only conceivable reason why it was not given was to ensure that Hutchinson did not frustrate the process by stepping in to appoint fixed charge receivers over Lighthouse View and Turnhouse Road.  He also appeared to submit that this was part of a strategy devised between the joint administrators and Alpha, with Howes Percival also advising Alpha and the prospective Alpha joint administrators, to secure a moratorium against enforcement with a view to obtaining time to launch the Alpha trust claim.  

52.	Whilst I will return to Alpha later in the context of the removal application I do not consider that Mr Khangure’s submissions are of any particular relevance in the context of the permission applications.  I am not sitting on appeal from the original administration order, which is not the subject of any challenge, and the position as at November 2016 is not of any direct relevance to the position as at May 2017 and thereafter when these applications were issued and pursued.

53.	Moreover I am not convinced by Mr Khangure’s criticisms in any event.  The purpose of the administration was stated in the statement of proposals to be to achieve the objective of securing a better result for creditors as a whole than through liquidation.  It should be recorded that this was qualified on the basis that the joint administrators were uncertain as to whether or not ordinary unsecured creditors would receive a dividend.  On the basis of the information then available to the joint administrators they were reasonably entitled in my judgment to form the view that the realisation of Lighthouse View and Turnhouse Road might enable there to be a return for the unsecured creditors.  Thus the value attributed by Mr Mohammed to Lighthouse View was £900,000 and the value attributed to Turnhouse Road was £6,390,000.  Given the secured liability to Hutchinson as stated by Mr Mohammed there plainly was every reason to believe that there might be a return to the unsecured creditors.  Although Mr Khangure criticised the joint administrators for failing to make proper enquiry as to the accuracy of the values stated by Mr Mohammed, there is no reason in my judgment to consider that the joint administrators were not entitled to take this information at face value for the purpose of applying for an administration order.  

54.	It is more relevant in my view to consider the position as it was as at May 2017, when the joint administrators made their permission application, and thereafter.  

55.	Beginning with Lighthouse View, I am quite satisfied that the joint administrators were entitled to rely upon the advice which they were receiving from FHP, the property consultants who they had instructed, who were clearly advising them that the offer of £300,000 from Crowther was a reasonable offer and should be accepted, on the basis that there was no guarantee that the freehold could be obtained or the value otherwise enhanced and every prospect, based on the previous history, of great difficulty in obtaining an alternative sale to another prospective purchaser should Crowther withdraw. Although Hutchinson was contending that it could obtain more for the property if they were in a position to do so, whether by obtaining the freehold or otherwise, they have provided no details at all of any alternative valuation or strategy and, as is clear, had not in fact been able to progress the purchase of the freehold despite having had considerable time and opportunity to do so.

56.	Mr Khangure submitted that this was irrelevant anyway, since given the value of Lighthouse View and given the minimum amount of secured indebtedness there was no prospect of the unsecured creditors obtaining anything from the sale of Lighthouse View in isolation.  In such circumstances, he submitted, there could have been no justification for the joint administrators seeking to do anything other than to allow Hutchinson as the secured creditor from exercising its security rights and appointing a fixed charge receiver to sell Lighthouse View.

57.	Mr Morgan submitted that, leaving aside the issue of the Alpha trust claim, which I address below, this submission was misconceived on the basis that if, as he contended, the joint administrators reasonably concluded that there was a prospect of there being a surplus for the unsecured creditors upon the realisation of Lighthouse View and Turnhouse Road, then if they also reasonably believed that their having conduct of the sale of Lighthouse View would result in a great return in relation to that property alone then the impact would still, overall, be better for the creditors as a whole, including the unsecured creditors, then if Hutchinson was allowed to appoint a fixed charge receiver.

58.	In my judgment Mr Morgan’s argument is correct in principle.  It cannot be the case that each asset must be looked at in isolation so that Hutchinson as a secured creditor is entitled to insist on enforcing its security over Lighthouse View simply because the proceeds of that property by itself would not give a return to the unsecured creditors.  Thus, it would be necessary to look at matters in the round.  

59.	So far as Turnhouse Road is concerned, it does not appear that the joint administrators obtained any formal valuation or detailed strategy from FHP or anyone else as regards that property. 

60.	In his first witness statement made in support of the joint administrators’ permission application Mr Tailby said this:

“[40] … [Turnhouse Road] has a significant realisable value believed to be in the region of £4 million, according to [FHP], but this could rise to as high as £6.3 million once the due diligence has been carried out. Steps have not yet been taken to market [Turnhouse Road] as further expenditure is likely to be required to maximise the potential sale value.”

61.	In his second witness statement in support of the joint administrators’ permission application he added this:

“[24]   … It is incorrect to state that the [joint administrators] have done nothing to realise the land at [Turnhouse Road]. There appears a company email from [FHP] in respect of this land and the court will see that the realisation strategy to maximise value is complicated and potentially requires funds to be spent or a joint venture partner to be found. The lack of cooperation from [Hutchinson] with regard to a sensible realisation strategy has hindered this and it also emphasises why it is considered imperative for [the joint administrators] to retain control of the marketing and sale of the properties to ensure that the best value is achieved.”

62.	The email referred to is dated 29 June 2017 and was from FHP to the joint administrators.  It referred to the fact that the previous planning permission for the site had expired, that there needed to be a “ground up review” of the planning and market for the site, and that funds would be needed to “work [Turnhouse Road] into a more saleable entity with a masterplan, market driven design and planning in place”.  It suggested that a meeting take place to discuss these matters.  There is no evidence that this ever took place or, if it did, that it achieved any concrete result. 

63.	In the evidence in response to Hutchinson’s permission application all that Mr Mifflin said in relation to Turnhouse Road was that [28] that the joint administrators should retain control of the sale of that property until such time as the Alpha trust claim had been resolved.

64.	It is clear therefore that this what is referred to as a “realisation strategy” has only ever been the most outline and speculative of strategies, with no formal assessment having been undertaken either as to the prospects of improving the value, whether by applying for and obtaining planning permission or otherwise, and with no formal valuation or marketing and sales strategy having been obtained. Moreover, as is clear, in the absence either of funds being made available to the joint administrators to finance whatever steps are necessary, or some third-party being prepared to provide those funds on the basis of some joint venture, the joint administrators are simply not in a position to do whatever would be necessary to enhance the value from £4 million or thereabouts to the figure of £6.3 million suggested by FHP. It is clear in my judgment from the evidence as a whole that the joint administrators’ only real strategy, so far as it can be described as such, had been to seek to persuade Hutchinson to agree to the sale of Lighthouse View and to agree to the net sales proceeds being used to finance whatever action might be agreed to enhance the value of Turnhouse Road. It is, however, also clear in my judgment that by the time the joint administrators made their permission application and by the time that Hutchinson made its permission application there was no realistic prospect, as they must have known, of Hutchinson agreeing to this strategy. Moreover, as Mr Khangure submitted, given the clear and mandatory terms of paragraph 71(3)(a) of Schedule B1 there was never any prospect of Hutchinson being required to allow the joint administrators to do so.  Since the order sought by the joint administrators was for the net proceeds of sale of Lighthouse View to be held in an escrow account pending the review of the competing claims by Hutchinson and Alpha it is plain that the joint administrators were not seeking any order from the court which might enable them to use the net proceeds to fund some strategy in relation to Turnhouse Road.

65.	Mr Khangure criticised the failure by the joint administrators to provide any evidence of any worked-up realisation strategy for Turnhouse Road. Although Mr Morgan countered that it was unrealistic to expect the joint administrators to have undertaken any further activity in this regard once the removal application was made, whilst I agree that it would not be realistic to expect the joint administrators to expend significant time or cost in the face of that application, in circumstances where they could have no confidence that they would be entitled to recover their time costs or other costs as an expense of the administration if the court acceded to the removal application, I do not consider that this entirely justifies the failure by the joint administrators to put forward any positive worked-up realisation strategy for Turnhouse Road in response to the permission application made by Hutchinson.

66.	In fairness, Mr Morgan submits, with equal force, that Hutchinson has not produced any evidence as to its realisation strategy for Turnhouse Road. Although Mr Khangure re-sought to meet that criticism by contending that Hutchinson was in no position to do so, on the basis that the joint administrators have not formally accepted Hutchinson security interest or agreed to its having conduct of sale, that does not seem to me to answer the point that it would have been perfectly open to Hutchinson to obtain the consent of the joint administrators to a valuer appointed by Hutchinson having access to the property and to produce its own valuation and realisation strategy.

67.	Mr Khangure’s submission was that in the light of this evidence the only appropriate conclusion was that Turnhouse Road could not be said to have a value in excess of £4 million and that any suggestion by the joint administrators that it could have a value in excess of that and as much as £6.3 million was pure speculation unsupported by evidence.  In my view that overstates the position somewhat.  There is clearly some evidence of a potential value in excess of £4M, potentially significantly in excess of £4M.  However, I accept that by the time of the permission applications it was, or should have been, apparent to the joint administrators that they were unable to advance any positive case that more could be achieved for the creditors as a whole by permitting them to have conduct of the sale than if Hutchinson was allowed to do so.  That is because: (a) the joint administrators had no coherent realisation strategy which justified their having conduct of the sale so as to put that plan into effect; to the contrary both parties would – effectively – be in the position of having to begin from essentially a standing start; (b) there is no evidential or other basis for thinking that the joint administrators would have any more interest in or commitment to maximising the sale value of Turnhouse Road than would Hutchinson; this is not a case where there is a legitimate concern that a secured creditor owed less than the property is worth would simply sell it at a knockdown price.    

68.	I should also refer at this stage to the recent compromise of the dispute in relation to Lighthouse View. The circumstances are set out in the third witness statement of Mr Mifflin dated 25 January 2018 which was admitted without objection from Hutchinson. In short, what is said is that in December 2017 there were three break-ins at the property, which is vacant, which resulted in the property insurers only agreeing to maintain cover if increased – and more expensive – security was provided. In January 2018 Crowther reduced their offer from £300,000 to £200,000 in the light of the damage caused to the property due to the break-ins.  On 24 January 2018 Hutchinson accepted an offer made by the joint administrators under which Hutchinson would appoint a receiver over the property with costs applicable to the applications in relation to Lighthouse View being reserved for determination by the court.

(iii)	The relevance of the Alpha Trust claims

69.	The joint administrators’ position has been that once the Alpha trust claim was formally asserted on 31 March 2017, in circumstances where the letter stated that its purpose was to put the joint administrators on notice of the Alpha administrators’ interests in the properties and to ensure that they did not take steps to sell, dispose or otherwise part with the properties pending the agreement or determination of the Alpha administrators interests, they could not safely have allowed Hutchinson to appoint fixed charge receivers over Lighthouse View or over Turnhouse Road because: (1) they were potentially liable to the Alpha administrators if Hutchinson sold the properties and dissipated the proceeds, particularly in circumstances where enforcing any judgment against Hutchinson as a Dubai registered company would not necessarily be straightforward; (2) they were potentially liable to the Alpha administrators if Hutchinson sold the properties at a value which it was subsequently established was an undervalue and the shortfall could not be recovered from Hutchinson.

70.	The joint administrators observe that it was not until the 7 September 2017 that Hutchinson made any proposal to address these concerns and even then all that was proposed was that Hutchinson was “quite prepared to agree not to complete a sale for a period of time”:  paragraph 19 of the sixth witness statement of Mr Koolhoven.  The joint administrators contend that in those circumstances they were perfectly entitled to insist that they should have conduct of the sales and that they should hold the net proceeds in an escrow account or similar until the dispute between Hutchinson and the Alpha administrators was resolved.

71.	Hutchinson’s position is that none of this was necessary and that the joint administrators were inappropriately interfering in what was, on proper analysis, a dispute in which they had no interest. Mr Khangure submitted that either Hutchinson had a valid security claim or the Alpha administrators had a valid trust claim. In either case the joint administrators had no interest in the properties all the sale proceeds. It would have been perfectly sufficient for the joint administrators to notify the Alpha administrators that they perceived that they were obliged to allow Hutchinson to appoint fixed charge receivers and that if the Alpha administrators wished to take steps to protect their position as a party with a claimed interest in the properties for their proceeds they should take matters up with Hutchinson directly. Mr Khangure submitted that had the joint administrators taken that sensible approach then Hutchinson would have made that sensible proposal to the Alpha administrators as Mr Koolhoven made in his sixth witness statement and that an agreement would have been reached directly between the Alpha administrators and Hutchinson as indeed happened on the first day of this hearing. In short, Hutchinson’s position is that the Alpha trust claim does not provide any justification for the stance taken by the joint administrators.

72.	I agree with Mr Khangure that the mere fact that the Alpha administrators had asserted this claim did not in itself prevent the joint administrators from agreeing to Hutchinson appointing fixed charge receivers, if that was otherwise the appropriate outcome. I agree that it would have been sufficient for the joint administrators to give notice to the Alpha administrators of their proposed intentions so as to enable the Alpha administrators to take appropriate steps to protect their interests directly as against Hutchinson. It also follows, in my judgment, that the joint administrators could not legitimately say that they were at risk of personal liability for allowing Hutchinson to sell at an undervalue in those circumstances; again the Alpha administrators’ remedy would be to ensure effective protection against a sale by Hutchinson which they might consider was at an undervalue.  Insofar as the joint administrators were concerned that they could not safely undertake these steps without agreement by the Alpha administrators which was not forthcoming then they could simply have applied to the court for directions; it did not justify the active prosecution of their own permission application or the active defence of the Hutchinson application. 

(iv)	The joint administrators costs and expenses

73.	Within the correspondence and evidence from Hutchinson is some criticism of the joint administrators’ fees which have been sanctioned by the creditors at 5% of the consideration for property sales.  There has been some suggestion that the joint administrators have been motivated more by a desire to secure payment of their fees from the property sales than from a genuine desire to achieve the admin purposes.  There has also been some suggestion that the fees are excessive.

74.	I entirely reject any suggestion that there is any legitimate basis for complaint in this respect as regards Lighthouse View.  Hutchinson has adduced no evidence to the effect that the 5% charge is in any way outside the norm or that if it appointed a fixed charge receiver the fees would be less.  I do not accept that there is any basis for the suggestion that the joint administrators approach has been fees driven.  

75.	Whilst I reach the same conclusion as regards Turnhouse Road there are nonetheless two material differences, which are that: (1) it is apparent that a 5% charge on a property which sells for £4M or above will be very much more substantial than a 5% charge on a property which sells for £300,000, so it might be thought unfair on Hutchinson to be deprived of the opportunity of seeing if it can obtain a reduction in the fee which would be charged by a fixed charge receiver on the sale of that property; (2) the amount of time and effort put in so far by the joint administrators as regards Turnhouse Road is very significantly less than that put into Lighthouse View.

(v)	Application of Atlantic Computers guidelines

76.	It is convenient to determine the application in relation to Turnhouse Road first, that being the remaining substantive dispute between the parties.  The starting point is that it is not possible on the evidence before the court to conclude that there is no possibility at all of any return to the unsecured creditors from the sale of Turnhouse Road.  Whether or not this is so will depend on: (a) the value obtained, which in turn will depend on whether any steps can be taken to enhance the value up from £4 million; (b) the amount of Hutchinson’s secured liability.  It is thus not a case where the considerations identified by Richard Snowden QC in Re Capitol Films apply in full force.  

77.	However, I consider that it is nonetheless very material that: (i) on the evidence before me the joint administrators have no worked up realisation strategy for enhancing the likely sales value above £4 million and no obvious source of finance with which to do so; (ii) on the evidence before me unless the sale value can be substantially increased above £4 million it is more likely than not that there will be little if any return to the unsecured creditors.  As Mr Khangure observed, in addition to the principal amount due to Hutchinson there must be added interest and there must also be deducted the costs of sale which, if the joint administrators had conduct, would include their 5% fee and, potentially, the cost of obtaining finance from some third party via some form of joint venture; (iii) there can be no confidence that the joint administrators could realise a sale of Turnhouse Road within any relatively short timescale given the lack of a worked out realisation strategy and the lack of access to funds or a partner.  In that regard it is material that, as Mr Khangure submitted, administration is intended to be a short term regime even though, as Mr Morgan noted, the one year administration term is not infrequently extended in practice.  It follows that whilst the second guideline – the court should normally grant leave to enforce where so doing is unlikely to impede the purpose of administration - does not apply in full force, it does apply with considerable force here.

78.	When I come to conduct the balancing exercise, it follows that in addition to the need to give great weight to the proprietary interests of Hutchinson I should also have regard to the point which I have just made.  

79.	As regards the other factors identified in Atlantic, it does not appear to me that here are any other really decisive factors.  Thus this is not a case where either party can identify that it will necessarily suffer any significant loss either way when I consider the consequences of granting or refusing leave to enforce.  It is not a case where the joint administrators’ proposals will be stymied if leave is granted but nor is it a case where Hutchinson will necessarily suffer a worse outcome if leave is not granted.  The administration has continued for some time but, given that the administration has effectively been put on hold since March 2017 by the disputes between the joint administrators and Hutchinson – and particularly given that I am rejecting Hutchinson’s removal application – that is not of as much weight as might otherwise be the case.  I address conduct below in a number of separate respects but I do not regard it as a determinative factor here.

80.	In short, it seems to me that this is a case where Hutchinson has made out its case to be entitled to enforce its security on the basis that there are no strong countervailing considerations to the great weight which should normally be attached to the right of a secured creditor to enforce its security and in particular in circumstances where there is no particular reason to consider that the interests of the unsecured creditors – or indeed the interests of the Alpha administrators as a potential higher ranking secured creditor – will be prejudiced by allowing Hutchinson to enforce its security.  Although Mr Morgan submitted that the application was premature, exemplified he said by the fact that in his witness statement in reply Mr Koolhoven had suggested at [21] that if the removal application succeeded Hutchinson would be prepared to discuss the sale strategy with the incoming administrators further, it seems to me that it is important for progress to be made in the realisation of Turnhouse Road and that Hutchinson should not be criticised for making what it may have regarded as a constructive proposal albeit one which – given my conclusion as regards the removal application – needs no further consideration.

81.	As regards Lighthouse View I regard the position as far less clear cut.  Whilst again there would have little prospect of any or any significant return to the unsecured creditors for the reasons I have given above, and whilst again I should attach great weight to Hutchinson’s security interest, nonetheless there would have been a number of significant countervailing circumstances, namely that:

81(a)	The joint administrators had obtained a valuation and a buyer and confirmation from the valuer that a sale at the agree price was a good outcome.  Hutchinson had advanced no cogent grounds for believing that it could secure more, had not obtained any competing valuation, had put forward no alternative strategy, and had achieved nothing in terms of its strategy to secure the freehold.

81(b)	There was a significant risk that if Hutchinson had been permitted to enforce the sale to Crowther would have been lost and no alternative buyer would have been found within a reasonable timeframe or at a comparable price.  Whilst that would have been likely to have harmed Hutchinson most, there was always a risk that it would also have harmed Alpha if it made good its Trust claim and the unsecured creditors if the overall net sale proceeds of both properties exceeded the amount due to Hutchinson.  It was not until September 2017, when Mr Koolhoven produced his 6th witness statement in response to Mr Mifflin’s witness statement in reply, that Hutchinson first suggested that it would be prepared to cover any shortfall between the £300,000 offered by Crowther and the sale price achieved by Hutchinson if it was allowed to appoint a fixed charge receiver.

81(c)	The joint administrators’ proposals had the attraction of enabling a speedy disposal and thus avoiding the continuing costs of preservation of the property and the risk of damage.  In this instance the advantage of speed lay with the joint administrators and the risk of delay lay with Hutchinson.

81(d)	Having been taken at some length and in some detail through the correspondence it is plain in my view that Hutchinson’s approach was influenced by considerations were which misconceived and in my judgment at least in some respects improper.  Thus I have already said that I regard Hutchinson’s criticisms of the joint administrators’ fee as misplaced.  It is also plain from the evidence that they were – wrongly – critical of the joint administrators for not simply accepting the TUV claim without more and seeking to place pressure on them to do so.  It is also plain from the evidence that they were – wrongly I am satisfied – critical of the joint administrators’ intention to take their fees, agreed with the creditors of ABC and CP, from the sale proceeds of Caroline House and Prospect House and seeking to place pressure on them not to do so.  It is also plain from the evidence that they were – wrongly I am satisfied – believing the joint administrators and Howes Percival to be in cahoots with the Alpha administrators in relation to the Alpha trust claim and antagonistic to Hutchinson.  I also accept that they were less than helpful in providing the joint administrators with a clear and document supported statement of the amounts advanced by Hutchinson to TPS and the source of the funds, as well as the amounts repaid and the statement of account, let alone a clear and document supported statement of Hutchinson’s involvement in the circumstances of the transfer of Caroline House and Prospect House to ABC and the arrangements in that regard.  They were – it is clear and as HHJ Pelling QC must have concluded – acting unreasonably in seeking to refuse to consent to the relinquishment of the charges granted by ABC and CP which were void for non-registration at Companies House without the joint administrators agreeing not to receive payment of their fees from the proceeds of sale of Caroline House and Prospect House.     

82.	In the circumstances, I do not consider that I am able to conclude with confidence that the joint administrators’ permission application would have failed or that Hutchinson’s permission would have succeeded in relation to Lighthouse View, still less that an adverse costs order would have been made against the joint administrators in that respect even if that had been the outcome.

(vi)	Conclusions in relation to the permission applications

83.	No substantive order is necessary in relation to the joint administrators’ permission application.  Hutchinson is entitled to the order which it sought in paragraphs 2 and 3 of its permission application in relation to Turnhouse Road, which recognises the difference between the order which this Court could make in relation to property situated in England or Wales and the order which this Court should properly make in relation to property situated in Scotland. 

84.	I have said that I will not finally determine costs until the parties have had the opportunity to draw any without prejudice save as to costs material to my attention, but on the basis of my findings above, and subject to any such material my provisional view is that:

84(a)	There should be no order as to costs as between the parties in relation to the joint administrators’ permission application and in relation to Hutchinson’s permission application insofar as it relates to Lighthouse View.

84(b)	Hutchinson is entitled to its costs in relation to its permission application insofar as it relates to Turnhouse Road.  My provisional view is that it would be appropriate for me to fix a percentage of the total costs of that application which relate to Turnhouse Road rather than to leave it to detailed assessment and given, as I have already said, that very little attention was concentrated on Turnhouse Road in the evidence and submissions my provisional view is that it should be a modest percentage of no more than say 10%.

E.	The removal application

85.	As I have already indicated, the primary basis for the application was said to be the conflict between the joint administrators’ duties to TPS on the one hand and to ABC and CP on the other.  In submissions Mr Khangure also contended that there was a conflict between their duty to TPS and their interest as joint administrators of ABC and CP in retaining the fees which they had already taken from the sale proceeds of Prospect House, Caroline House and the Caroline House car parks.   I will address this in more detail below.  However, before I do so I should also address a further complaint which emerged in the responsive evidence of Mr Koolhoven and in submissions as to the position of the joint administrators and Howes Percival in relation to the Alpha trust claims. 

The complaint in relation to the contact between the joint administrators and Howes Percival and the Alpha administrators 

86.	In his 5th witness statement Mr Koolhoven expressed his concern at [25] – [27] that there were “connections” between the joint administrators and their solicitors Howes Percival on the one hand and the Alpha joint administrators on the other hand.  In particular, it is said that the evidence shows that Howes Percival had advised the Alpha joint administrators before their appointment in relation to the Alpha trust claim and it is also suggested that there has been some form of concerted plan to ensure that Hutchinson could not exercise its security rights over Lighthouse View and Turnhouse Road so as to allow the Alpha administration to take place and to allow the Alpha administrators to advance the Alpha trust claim against TPS and against its assets.

87.	Since the removal application was not made on this basis and hence had not been addressed by the joint administrators in their evidence filed in reply, and since these complaints do raise matters of complaint as against Howes Percival as well as against the joint administrators Mr Morgan took a preliminary objection that there was no basis for the court to entertain this complaint since: (a) there was no separate or proposed amended application for an order declaring that Howes Percival could not act for the administrators of TPS, whether that be the existing joint administrators or any replacement administrators; (b) the joint administrators and Howes Percival were prejudiced in having had no opportunity to respond to these matters.  He accepted that Mr Koolhoven had advanced his concerns in his witness statement in reply in September 2017 but pointed out that there was no permission for the joint administrators to file and serve any evidence in reply.  Mr Khangure submitted that this was nothing to the point since the joint administrators could clearly have sought and doubtless would have obtained consent or if not permission to reply had they wished.  However in my judgment in the absence of an application by Hutchinson to amend the existing application so as to seek an order as against Howes Percival as well as against the joint administrators, and in the absence of communication from Moore & Tibbitts making it clear that they intended to rely on the Alpha connection as a freestanding reason for removal, the joint administrators and Howes Percival were perfectly entitled to take the view that there was no need or justification for undertaking this exercise, nor was it reasonable to expect them to have done so.  Mr Morgan also made the point that it would be highly undesirable in those circumstances if I was to make any findings adverse to Howes Percival without it having had a fair opportunity to understand precisely what the complaints made against it were and precisely what relief was sought against it and on what basis, so as to be able to consider its position and reply.  I agree.

88.	In any event I do not consider that there is any substance in these complaints.  I accept that there is evidence which shows that Howes Percival did provide advice to the Alpha administrators both pre- and post-appointment.  However, it is also clear from that evidence that Howes Percival provided advice in relation to possible proceedings against Alpha LLC whereas it was Nelsons Solicitors who provided advice to the Alpha administrators in relation to “securing any surplus funds that may be available from the administrators of the UK Companies” (i.e. TPS, ABC and CP).  This is consistent with the fact that it was Nelsons who submitted the Alpha trust claim to the joint administrators and who made the Alpha application.  In short, whilst the evidence adduced by Hutchinson does disclose that Howes Percival was involved in the Alpha administration and was aware of the potential Alpha trust claims before they were formally notified by Nelsons, the same evidence discloses that a decision was taken – for good and obvious reasons – for the Alpha administrators to be advised and represented by separate solicitors in relation to the Alpha trust claim as advanced against the joint administrators.  In short, this evidence undermines Mr Koolhoven’s complaint that there is a conflict between Howes Percival’s position as solicitors to the joint administrators and their position as having previously provided some advice in relation to separate matters to the Alpha administrators.  Furthermore, it is not immediately obvious why this should prevent Howes Percival from addressing the Alpha trust claim on behalf of the joint administrators.  If anyone was to be concerned it would presumably be the Alpha administrators as Howes Percival’s former clients who might be concerned that Howes Percival had come into possession of material information relating to such claims whilst acting as their solicitors.  However, they make no such complaint.  It is apparent that Hutchinson’s real concern is that the joint administrators and the Alpha administrators are “ganging up” against Hutchinson in relation to the dispute as to who has the better claim to Lighthouse View and Turnhouse Road and who has any proprietary claim there might be in relation to the proceeds of sale of Caroline House and Prospect House and that this close connection is exemplified by the involvement of Howes Percival.  However, the application is not made on the basis that the joint administrators are not capable of determining this issue independently – indeed in his first witness statement in support of this application Mr Koolhoven said in terms at [14] that “there is no suggestion that the administrators will in fact act in a way which is in any way improper other than the conflict”.  Moreover, since it is Hutchinson’s position that this is really a dispute between Hutchinson and the Alpha administrators in which the joint administrators have no role, it is difficult to understand the relevance of this complaint anyway.  In short, it seems to me that this complaint is an ill-thought out attempt as a makeweight to seek to buttress the primary complaint whereas on proper analysis it leads nowhere.

The complaint in relation to the TUV claim

89.	As I have said, in his witness statement in support of the application Mr Koolhoven expressly disclaimed any intention to argue impropriety; his position was that there was at irreconcilable conflict between the joint administrators’ duties to TPS and its duties to (and, it is now said, interest in the administration of) ABC and CP.  What he said in paragraph 13 was as follows:

“That strong likelihood [of the joint administrators having to apply for relief in relation to the TUV claims] gives rise to a scenario where the [joint administrators] would have to make best efforts to remove assets from companies in which they are also administrators. Their duties to each company come into conflict and are irreconcilable – they cannot carry out their duties independently and fairly for all of the relevant companies. Whereas their solicitors, Howes Percival, also face the same scenario, at least they may be able to ameliorate the effects of such conflict by setting up internal Chinese walls (although there is no indication that they have yet considered doing so) – no such option is available to the [joint administrators].”

90.	In paragraph 16 he also made complaint about a number of other associated matters, being: (a) a failure to deal with the conflict position; (b) a delay to agree to ring fencing the net sale proceeds of Caroline House and Prospect House; (c) a failure to agree not to take administration expenses from the net sale proceeds of Caroline House and Prospect House; (d) a failure to confirm Hutchinson as a creditor of ABC and CP.

91.	In his witness statement in response Mr Mifflin on behalf of the joint administrators made the following points:

92.	As regards the conflict point, Mr Mifflin devoted a considerable part of his witness statement to explaining why there had been a delay in investigating the TUV claim and why such investigations were still not completed.  In particular he pointed to the significant delay caused by the initial failure by DWS to provide files in relation to the purchase of Prospect House or Caroline House and their subsequent statements that they did not have files relating to such transactions when such statements appeared at least arguably incorrect.  He also pointed out in some detail that such information has been provided indicated that the TUV claim was neither straightforward nor indisputable, contrary to Mr Koolhoven’s repeated assertions to the contrary.  He stated at [79], and I agree, that the joint administrators had “repeatedly demonstrated that they are aware of and intend fully to investigate and address the TUV claim”.  He stated at [81] that the joint administrators “in light of their investigations to date and the fact that they are truly independent of both [Hutchinson] and the other creditors of [TPS] are in fact best placed to investigate and then take steps to resolve the potential TUV claim”.  He stated at [90] that “as all three companies are in administration, the administrators can legitimately request and view all relevant information thereby avoiding the need for a contentious and therefore costly dispute”. He stated at [91] that the joint administrators had “confirmed that, if necessary, they will apply to court for a declaration on the TUV point”.

93.	As regards the subsidiary points made in paragraph 16, he responded that:

93(i)	In relation to (a), he disputed that this point had not been addressed.

93(ii)	In relation to (b) & (c), he said that the joint administrators had always confirmed that they would not make any distribution to creditors of the funds received from the sale of the properties until such time as the TUV point was resolved. In submissions there was some debate as to whether the joint administrators had undertaken not to take any fees from the net sale proceeds of Caroline house or Prospect house before the hearing before Judge Pelling on 21 July 2017 and as to whether or not they had accepted their liability to repay any such fees in the event the court so ordered before Mr Mifflin made this concession in his witness statement at [86]. It appears that they first made this concession on 6 July 2017.  Even if it could be said that they should have made it earlier I do not regard this as a serious matter in itself for two reasons. The first is that it would have been obvious to everyone, including the joint administrators and the respective solicitors, that this would always have been something which it was open to the court to order if that was appropriate.  The second is that what Mr Koolhoven appears to overlook is that even if the properties ought to have been transferred back to TPS, they would still have had to be sold by the joint administrators, albeit acting in their capacity as administrators of TPS, so that the same fees would have been incurred anyway and, as I have already said, there is no evidence to the effect that the fees are unduly high.

93(iii) In relation to (d), he made the point that Hutchinson had not in fact submitted a claim to be an unsecured creditor of ABC or CP.  In such circumstances, and in the absence of such a claim or a request, it does appear that Mr Koolhoven’s criticism in this respect is largely misconceived.  It was surely for Hutchinson in the first instance to decide whether or not once it accepted that its charges were void for non-registration it wanted to be regarded as an unsecured creditor of TPS or of ABC or, conceivably, of both rather than for the joint administrators in their capacity as administrators of ABC to offer to accept it as an unsecured creditor of ABC.   

Discussion

94.	I have already referred to the relevant legal principles.  It is plain in my judgment that Hutchinson’s primary submission, which is that the existence of an actual conflict by itself means that the administrators must apply to the court for permission to cease acting as administrators for one, if not more, of the relevant companies, is wrong as a matter of law. It is also plain in my judgment that what the court needs to consider, and what the parties ought to have addressed in their evidence, but did not in any of or any sufficient detail, is the question as to how, if at all, such conflicts can properly be managed without the need for the administrators having to cease acting.

95.	In oral submissions Mr Khangure submitted that the court ought to proceed on the basis that it was appropriate to grasp the nettle now and to order the removal of the joint administrators to allow independent administrators to begin the task of reviewing the circumstances surrounding the TUV claim and making the claim, that was appropriate, before further time and cost was wasted by the existing joint administrators and Howes Percival in circumstances where even if not now at some stage further down the line there was a real risk that the conflict would have to be managed by removal in any event. He submitted that whilst it might be appropriate in a large and complex and multiple company administration for the court to be involved in setting up and reviewing an appropriate management structure for dealing with any conflict, that was not appropriate in a smaller scale case such as the present.  He submitted that it was difficult to see how the conflict could be managed short of removal of the joint administrators.

96.	In oral submissions Mr Morgan submitted that as at the date of the removal application, and as at today’s date, the stage had not yet been reached where an actual conflict such as would require a decision as to how to manage that conflict had arisen.  He submitted that as and when such a conflicts did arise, there was a range of alternative options short of removal, which might comprise: (a) the provision of appropriate separate legal advice, whether in the form of an opinion from counsel jointly instructed or, possibly, separate legal representation; (b) the appointment of an additional administrator; (c) separate representation by the ABC and CP administrators on the one hand and Hutchinson on the other in an application to the court to determine the TUV claim. He submitted that in a case such as the present, where it was quite conceivable that the costs of extensive investigations by separate administrators instructing separate solicitors and counsel in such a complex matter could easily become disproportionate having regard to the value of the assets in issue, it would be wholly wrong simply to order the removal of the administrators without giving all consideration to alternative, less onerous and costly, ways of managing the position. He submitted that what Mr Mifflin had said in his witness statement in response, particularly at paragraphs 90 and 91, was entirely sensible and appropriate.

97.	I am satisfied that Mr Morgan’s submissions are the more compelling and are to be preferred to those of Mr Khangure. The arguments in favour of minimising the time and cost duplication of investigation are as, if not more, compelling in a relatively small scale multiple administration with relatively modest assets such as the present, as they are in a larger multinational multiple group administration case. Moreover, it is clear that both the joint administrators and Howes Percival have already undertaken a substantial amount of work in obtaining and assimilating documentation relevant to the TUV claims and in considering the relevant legal principles and the various arguments for and against the claims being advanced by Hutchinson. This is not a case either where no work has been done or where there is a natural break in the work such that new administrators, probably instructing new lawyers, could begin the task without significant duplication of time and effort and cost.

98.	Moreover I am also satisfied that this is not a case where the conflict has become so acute that steps to manage it must be taken immediately.  I accept that the investigation phase has still not been completed and that in all likelihood the next step will be to ensure that DWS provides either further files relevant to the transaction, if necessary by application, or an adequate explanation is given as to why not.  I also accept that at the appropriate stage it will be necessary for Hutchinson to provide a full and reasoned response to the points already identified by Mr Mifflin as to why this is not a straightforward TUV claim.  In my judgment the likely sensible next step would be for the joint administrators in their capacity as administrators of all three companies to commission an advice from counsel as to the merits of the respective arguments for and against and a proposal as to the way forward.  That can be considered by the joint administrators.  It may well be that the only party opposing the proposal is Hutchinson.  In such a case it is likely that the joint administrators can simply apply to the court for directions and Hutchinson can put forward its case. I reject the notion that the joint administrators will simply and self-evidently be unable to act in any of this because of the conflict between their respective roles.  As has been emphasised, in cases such as this there is an advantage in the sharing of information between the companies concerned with a view to reaching a clear consensus as to how pre-administration transactions as between connected companies should be characterised and – where appropriate – regularised by monies or assets being transferred.  It is not self-evident that there will be any challenge to such proposals by all or the majority of creditors, whether secured or unsecured.  It is not self-evident that in a case such as the present it will matter very much if at all to Hutchinson, for example, whether the net proceeds of sale stay in ABC and CP or are transferred to TPS if their only claim is to be an unsecured creditor of each.  If it does matter because Hutchinson contends that if the TUV claim succeeds it will be entitled to be treated as a secured creditor in relation to the net proceeds, the likelihood is that the contest will be between the unsecured creditors of ABC and CP on the one hand and Hutchinson on the other, and the rival claims can be determined by the court with the joint administrators having no irreconcilable conflict.

99.	In short and in summary, I accept Mr Morgan’s submission that the removal application is precipitate and is not made out.  I am bound to say that it seems to me to have been made very much as a tactical move and as part of the aggressive approach taken by Hutchinson in relation to these claims. Such applications should never be made without careful consideration of the position and an attempt made, by both sides acting co-operatively, to proceed in a constructive and time and cost-efficient manner.  Instead the application has served only to waste time and costs and make the resolution of matters generally more difficult.         

100.	For all of those reasons I am satisfied that the removal application should be dismissed and that – subject to any further submissions made by reference to without prejudice save as to costs material – my provisional view is that Hutchinson should pay the joint administrators costs of the application.  

F.	Conclusions

101.	I invite the parties to seek to agree all consequential matters including any question of the costs of the declaration application, failing which I shall determine all outstanding matters at the hearing fixed for 26 February 2018.