Section 236 Insolvency Act ("IA") 1986 enables the Court power to summon persons with information about the affairs of a company to appear before it and / or to produce documents. In our August bulletin we considered the decision of the English High Court in Re MF Global [2015] EWHC 2319 when it was held that s236 does not have extra-territorial effect. However, having looked at the issue again in Official Receiver v Norriss [2015] EWHC 2697, the High Court has departed from the position in Re MF Global.

Norriss concerned a Liquidator's application under s236(3) IA 1986 for an order requiring a respondent resident in Hong Kong to produce a witness statement exhibiting documentation relating to a transfer of funds from the company in liquidation to a trust in Hong Kong.

Earlier this year, the Court in Re MF Global held that, whilst section 236 IA could not have extra-territorial effect, the Court could order examination outside the UK under s237(3) if the appropriate procedural mechanisms were in place in that jurisdiction. The Court had felt bound to follow the decision in Re Tucker [1980] Ch 148 which considered the extra-territorial applicability of s236's predecessor, s25 of the Bankruptcy Act (BA)1914.

Having looked at the issue again, whilst the High Court in OR v Norrissconsidered that it had to give 'considerable weight' to Re MF Global, the Judge felt that there was a difference between s25 of the old BA 1914 and the new ss236 and 237 IA 1986. Unlike under s236 IA 1986, the power under s25 BA 1914 to order the production of documents was ancillary to the principal power to summon a respondent to attend for examination before the Court. The Court gave weight to the structure of s236 IA 1986, and particularly the existence of subsections, which it held conferred a 'freestanding' and 'independent' power to order a respondent to submit an account of his dealings and produce documentation.

The Court accepted that the Official Receiver had discharged the burden set out in British and Commonwealth Holdings plc v Spicer and Oppenheim [1993] AC 426 and reiterated in Re Mid East Trading Ltd [1998] 1 BCLC 240, which provides that the Liquidator must reasonably require to see the documents, and it must not impose an unnecessary and unreasonable burden on the Respondent. However, the Judge was surprised that the Court in Re MF Global had left Re Mid East Trading Ltd out of its "impressive citation of authority", as in that case the Court had found that an order could be made for the production of documents outside the jurisdiction as it did not impose an unnecessary and unreasonable burden on the Respondent. The Judge in Re MF Global had also failed to appreciate the structural differences between the old and existing provisions and therefore failed to distinguish between the requirement to attend examination and be cross-examined, and the requirement to produce documentation, the latter of which is considerably less burdensome.

With some hesitation, the Court declined to follow the decision in Re MF Globaland held that s236(3) of the IA 1986 does have extra-territorial effect. Provided that the test in Commonwealth Holdings is satisfied the Court has the power to order the production of documentation relating to the company in whose liquidation the application is made under s236 IA 1986, but in this case the production of information from the Trust's bank account would be limited to that relating to the transactions from the Company to the Trust.