All Leisure Holidays Ltd & Ors, Re Insolvency Act 1986 [2017] EWHC 870 (Ch) (31 January 2017)

Neutral Citation Number: [2017] EWHC 870 (Ch) Claim No: 8001/2017. 8451/2016 IN THE HIGH COURT OF JUSTICE CHANCERY DIVISION BIRMINGHAM DISTRICT REGISTRY Birmingham Civil Justice Centre, 33 Bull Street, Birmingham B4 6DS. 31/01/2017 B e f o r e : HIS HONOUR JUDGE PURLE , Q. C. (Sitting as a High Court Judge) ____________________ IN THE MATTER OF ALL LEISURE HOLIDAYS LIMITED (IN ADMINISTRATION) and Others Applicants - and - IN THE MATTER OF THE INSOLVENCY ACT 1986 ____________________ Transcribed from the digital recording by Marten Walsh Cherer Ltd., 1st Floor, Quality House, Quality Court, Chancery Lane, London WC2A 1HP. Telephone No: 020 7067 2900. Fax No: 020 7831 6864 MR. JAMES MORGAN, instructed by Pinsent Masons LLP, appeared for the Applicants ____________________ HTML VERSION OF JUDGMENT ____________________ Crown Copyright © JUDGE PURLE: This is an application in relation to the following companies: Group Air Realisations Ltd. (formerly known as Page & Moy Travel Group Aircraft Holidays Ltd.); Travel Group Realisations Ltd. (formerly known as Page & Moy Travel Group Ltd.); Group Surface Realisations Ltd. (formerly known as Page & Moy Travel Group Surface Holidays Ltd.); and also a company still known as All Leisure Holidays Ltd. Mr. Morgan of counsel has invited me on behalf of the administrators of these companies to apply the provisions concerning electronic delivery in insolvency proceedings set out in Rules 12A.10-12A.13 of the Insolvency Rules 1986 as amended. In short, what is sought is the court's sanction to the delivery of electronic notifications to customers, principally because the saving of time and costs outweighs any possible advantage to the customers in question, or the administrations in general. Additionally, the sending of a single notice to all creditors (not just customers) is sought under Rule 12A.13 together with the relevant link, as disproportionate costs will be saved. Three of the companies in question were part of the Page & Moy group of companies which provided tour holidays, mainly by air, but, on occasion, overland using railways. One of the companies owned the trade marks, the other companies were the trading companies. I refer to all three together as "the P&M companies". The fourth company, All Leisure Holidays Limited (which I shall call "ALH") was with the P&M companies part of a wider group ultimately owned by All Leisure Group Plc. ALH provided cruise holidays under two brands: "Voyages of Discovery" (using a vessel named the Voyager) and "Swan Hellenic" (using a vessel named the Minerva). Administrators were appointed of the P&M companies on 30 th December 2016 and of ALH on 4 th January 2017. They are the same administrators, appointed by the directors in each case. A pre-pack has taken place under which the business and assets of the P&M companies have, with an immaterial exception, been sold to a company called G Adventures (UK) Ltd., which I shall call "G Adventures". The result of that is that G Adventures will honour all current and future passenger bookings. It is therefore very unlikely that customers of the P&M companies will suffer any loss from the insolvencies. Although customers are at least prospective or contingent creditors, they are unlikely, ultimately, to have anything to prove or receive as the holidays that they have booked are likely to be provided. In the case of ALH, assets relating to the cruise business have also been sold to G Adventures. ALH had a number of customers whose bookings will not be honoured. However, they will be able to claim, in the case of UK based customers, a refund from a variety of sources, such as the CAA, ABTA, ATOL or a credit card provider. There are, additionally, around 850 overseas customers where the position is less clear. Their position may depend upon the rights they have under their local law. In the case of all these customers (home and overseas) subrogated claims may arise in favour of the persons standing behind the bookings. Those persons are in one sense not affected by this application because they will receive hard copy notices, whereas the application made by Mr. Morgan is for electronic notifications only to be given to the actual customers. All 4 companies together have 14,222 customers. The administrators hold email addresses for 9,688 of those customers. There are also 3,522 trade creditors who are not affected by the application for electronic notifications. A number of communications are required throughout the course of the administrations for all creditors, including customers. 5 necessary communications for each company have been identified, starting with the administrators' proposals, and there may well be more. There may also be follow-up communications in a liquidation if, as may well occur, any of the administrations is ultimately converted into a creditors' voluntary liquidation. If hard copy notifications to every customer are required every time, the costs will be substantially increased over the cost of electronic communications. The application before me has two aspects, (1) to permit electronic notifications to customers of all four companies and (2) to allow (in the case of each company) one notice notifying such customers (and other creditors) that all reports will in due course be posted to an identified website. Section 246B(1) of the Insolvency Act 1986 provides: " … where any provision of this Act or the rules requires the office-holder to give, deliver, furnish or send a notice or other document or information to any person, that requirement is satisfied by making the notice, document or information available on a website – (a) in accordance with the rules, and (b) in such circumstances as may be prescribed." Rule 12A.10(1) of the Insolvency Rules 1986 provides as follows: "Unless in any particular case some other form of delivery is required by the Act or the Rules or an order of the court ... a notice or other document may be given, delivered or sent by electronic means provided that the intended recipient of the notice or other document has – (a) consented (whether in the specific case or generally) to electronic delivery (and has not revoked that consent); and (b) provided an electronic address for delivery." Rule 12A.12(2) provides for the purpose of section 246B (and another section concerning a similar provision in bankruptcy) as follows: "An office-holder required to give, deliver or send a document to any person may (other than in a case where personal service is required) satisfy that requirement by sending that person a notice – (a) stating that the document is available for viewing and downloading on a website; (b) specifying the address of that website together with any password necessary to view and download the document from that site; and (c) containing a statement that the person to whom the notice is given, delivered or sent may request a hard copy of the document and specifying a telephone number, email address and postal address which may be used to request a hard copy." Rule 12A.12(2) therefore envisages the giving of a short notice only, whether in hard or electronic copy, rather than the more voluminous document which is available on the website. We all nowadays have experience of short communications which provide a link to a website which brings up much greater detail. It does not matter to the standard recipient that the initial communication is merely perfunctory, so long as the link is readily accessible. This is therefore likely to become, if it has not already become, a normal means of communication, thus saving the expense of excessively heavy documentation when duplicated over those entitled to receive it. However, even this may be disproportionately expensive if repeated for every communication, so that the Rules also provide, in Rule 12A.13, for a single notice to be given in appropriate circumstances. I consider this further below. The first point I have to decide is whether the customers who have given email addresses when booking a holiday have consented to email notifications, or whether hard copy notifications are required. It is said by Mr. Morgan that a large number of customers have consented to the sending of documents by electronic means for the purpose of Rule 12A.10. The large number Mr. Morgan is referring to are those customers who have in fact provided email addresses. He does not suggest that those who have not done so can be taken to have consented to email communication. Of the 14,222 customers, 9,688 have provided email addresses. It is in relation to those 9,688 customers that an order permitting electronic delivery of notices and other documents is sought. (I will consider later whether I ought to sanction just a single notice with a website link.) If I turn now to the P&M companies, customers who book holidays on line are required to provide an email address for communication purposes. If made over the telephone or through a travel agent, customers have the option to provide an email address, though they are not obliged to do so. The only purpose of providing an email address is for the purpose of receiving communications about the booking. Turning to ALH, bookings are taken only on the telephone or through a travel agent where, again, the provision of an email address is an option for the customer. Again, the only purpose of providing the email address is for the purpose of receiving communications about the booking. Going back to the wording of Rule 12A.10(1)(a), Mr. Morgan does not contend that any customer has "consented … in the specific case" to any particular notice. He does, however, suggest that that booking process amounts to a general consent for email communications. That submission has to be considered in the light of the terms and conditions of the relevant bookings. The fact that customers have provided email addresses is itself an indication that this is an available means of communication. If Mr. Morgan is right on the issue of general consent, there is no difficulty in satisfying Rule 12A.10(1)(b), as an order is only sought in relation to those customers who have in fact provided an email address, which obviously is "an electronic address for delivery". So far as the P&M companies are concerned, the terms state: "…we will then confirm your holiday by issuing a Confirmation Invoice which will be sent by email to the party leader or your travel agent ... from the 1 st March 2016, if you book by telephone you will also be asked for your email address so that we can send you all the relevant documentation for your booking more efficiently. This will include your Confirmation Invoice, Holiday Information and final travel documents…" The terms for all 4 companies in relation to data protection provide for data to be used in various circumstances, including: "'to advise you of information concerning your holiday booking, inquiry or other transaction", "for our business management and operation" or "to deal with your inquiry or booking..." The privacy policies for each of the 4 companies' websites state: "We require this information [including name and contact details including email addresses] to understand your needs and provide you with the service you have requested. We use it to advise you of information concerning your holiday booking, inquiry or other transaction." In my judgment those provisions, individually and collectively (where more than one apply), combined with the fact that the provision of the email address can only have been to receive information about the booking, amount to a sufficient consent to the means of communication in the case of anyone who has provided an email address. What was clearly contemplated was that any information relating to the booking could be communicated in that way including (had anyone thought about it) problems arising out of an insolvency process. I have no doubt that that provision survives administration or liquidation and applies to communications necessitated by the insolvency process. The reference in Rule 12A.10(1)(b) to consent being given "generally" is of wide application and would use much of its practical utility if interpreted in a restrictive way so as to be limited to (say) a consent given post-administration to the office-holder. I reached similar conclusions relating to the service of documents by email on student customers (in the case of learning establishments) who were required to give email addresses as a means of communication in In Re Advent Computer Trading Ltd. [2011] BCC 44 . I reached that conclusion without the benefit of Rule 12A.10, which did not then apply. It would be unfortunate if Rule 12A.10 were to be construed narrowly so as to make it more difficult to give email notifications. Accordingly, subject to one point Mr. Morgan's submission is, in my judgment, well-founded and I am prepared to make the order that he seeks. The one point to which this is subject is that there were also tick boxes on the websites which permitted customers to opt in to receive communications by email and/or post. Approximately 60% of those providing email addresses opted also to receive email communications. It might be said that, in the case of those customers who opted to receive communication by post, that precluded email communications. However, it is quite clear from the websites in question that what the tick box sections were about were general marketing communications and the sharing of information with related third parties. It did not negate the consent for communications by email in relation to the booking itself, and matters arising out of it, which were covered by the specific terms and conditions, coupled with the provision of an email address, which would include consent to communications about the consequences of any insolvency process upon the bookings, and to any other communications necessitated by that process. In my judgment those tick box provisions take nothing away from the conclusion that I had already expressed and which I confirm. I will accordingly permit electronic communication in relation to all customers who have given email addresses. This permission extends to those who have booked through agents (as has occurred in a number of cases) and have only given the email address of the agent. It will be the agent's obligation to its customer to take such steps as it can to pass on any communication it receives. I should add that those who have booked through an agent have, in most if not all cases, only given the agent's (and not their own) postal address, as well as only giving the agent's email address. In at least one case the customer only gave the agent's postal address, and no email address at all. So, whether it is by post or electronically, any communication will be with the agent, upon whom the customer will be dependent for being kept informed. It is obviously much more convenient that there should be email communication with such agents (where the agent's email address has been given) rather than multiple hard copies. The administrators also contend that the provisions of Insolvency Rule 12A.13(1) are engaged. That reads as follows: "Where the court is satisfied that the expense of sending notices in accordance with Rule 12A.12 would, on account of the number of persons entitled to receive them, be disproportionate to the benefit of sending notices in accordance with that Rule, it may order that the requirement to deliver or send a relevant document to any person may (other than in a case where personal service is required) be satisfied by the office-holder sending each of those persons a notice - (a) stating that all relevant documents will be made available for viewing and downloading on a website; (b) specifying the address of that website together with any password necessary to view and download the relevant document from that site; and (c) containing a statement that the person to whom the notice is given, delivered or sent may at any time request that hard copies of all, or specific, relevant documents are sent to that person, and specifying a telephone number, email address and postal address which may be used to make that request." There are then consequential provisions as to the period of availability and format of the documents in question which I need not read. Given the very large number of customers, most if not all of whom will probably never become creditors of the company, the sending out of multiple notices when one notice of the kind specified in Rule 12A.13(1) will suffice, will obviously be very expensive. It will also, in my judgment, be disproportionate to the benefit that is to be obtained from sending out of multiple notices. The sending out of all notices to all customers separately is simply unnecessary and wasteful, in terms of costs. There are in addition, as already mentioned, over 3,500 trade creditors, and I am satisfied that it would be disproportionate for more than one notice to be sent to any creditor. This must in my judgment be a paradigm example of the sort of case for which the provisions of Rule 12A.13 must have been intended. Any creditor with any real interest in the liquidation will be able to check periodically for updates, and significant costs will be saved. Estimates have been provided as to the costs per notice to all customers and creditors and the costs of a single notice (including the costs of a single electronic notice to the email customers already dealt with). The amounts are inordinately high, given the numbers of customers. If the minimum number of 5 notices as envisaged are required, then the cost of sending notices on all 5 occasions (electronic notices to customers providing email addresses, and hard copies to the remainder) will, on the smallest estimate, be £47,425.15, whereas the sending of one notice will be £9,485.03. That is self-evidently a saving which it is very desirable should be taken advantage of. In the circumstances, I am persuaded that incurring the higher costs would be disproportionate measured against the actual benefit of repeated notices. It will of course be open to individual creditors to request hard copies (without payment of a fee) as provided by 12A.13(1)(c) and 12A.13(4), but these are unlikely to be numerous. Finally on this part of the case, given that the relevant parts of rule 12A apply generally to any "office-holder", I consider it to be open to me now, rather than require a further application to be made in due course, to direct that the orders I am now making shall apply not simply to the current administrators but to any successor office-holders such as liquidators. The position will be no different once liquidation is in place, as seems likely on the present expectations. I will now hear the second part of Mr. Morgan's application. (Counsel for the Applicants addressed the court.) This is a further application by the administrators, through Mr. Morgan, of the same 4 companies that I have just dealt with, for limited disclosure pursuant to Insolvency Rule 1986, rule 2.30, which materially provides as follows: "2.30(1) Where the administrator thinks that it will prejudice the conduct of the administration or might reasonably be expected to lead to violence against any person for the whole or part of the statement of the company's affairs to be disclosed, he may apply to the court for an order of limited disclosure in respect of the statement or any specified part of it. 2.30(2) The court may, on such application, order that the statement or, as the case may be, the specified part of it, shall not be filed with the registrar of companies ... 2.30(6) The court may make any order for disclosure subject to any conditions as to confidentiality, duration, the scope of the order in the event of any change of circumstances, or other matters as it sees just. 2.30(7) If there is a material change in circumstances rendering the limit on disclosure or any part of it unnecessary, the administrator shall, as soon as reasonably practicable after the change, apply to the court for the order or any part of it to be rescinded. 2.30(8) The administrator shall, as soon as reasonably practicable after the making of an order under paragraph (7) above, file with the Registrar of Companies a copy of the statement of affairs to the extent provided by the order. 2.30(9) When the statement of affairs is filed in accordance with paragraph (8), the administrator shall, where he has sent a statement of proposals under paragraph 49, provide the creditors with a copy of the statement of affairs as filed, or a summary thereof…" This application is made prospectively in relation to a statement of affairs which is still to be provided to the administrators. Advent Computer Training Ltd. [2011] BCC 52 at [9] is authority for the proposition that this is permissible, though in the event I did not make an order under this Rule in that case. It must be right that a prospective application is permissible, as the administrator is ordinarily bound to provide a copy of the statement to the registrar of companies as soon as reasonably practicable upon his receipt of the statement of affairs under rule 2.29(7). Where, as in this case, it is known in advance of its making which part of the statement of affairs is likely to become the subject matter of an application for limited disclosure, it is desirable that the application should be brought as soon as possible. The evidence establishes that it will prejudice the conduct of the administration if full statements of affairs are filed containing the names and addresses and debts of the customers, all of whom must be identified as creditors, albeit possibly only prospective or contingent creditors in some cases. The reason for that is that the terms of the sale of the businesses and assets to G Adventures contain confidentiality clauses protecting those details. It is easy to imagine competitors taking advantage of such disclosure. The details are a ready-made customer database. A similar point was made in the Advent Computer case and I acceded to an application for non-disclosure of such details. I do so again. There are also concerns as to whether or not disclosure would occasion some breach of the Data Protection Act 1998. This, it seems to me, is unlikely given that there is an exemption under section 35 where disclosure is required under "any enactment", which is clearly the case in the event of a statement of affairs requiring creditor details (which includes customers in this case) to be identified. A statement of affairs in the prescribed form is a requirement of paragraph 47 of Schedule B1 of the Insolvency Act 1986 and the prescribed form requires creditor details. The administrators are also concerned that if unnecessary details are disclosed, customers might be approached who would in turn complain to the administrators. The administrators themselves might perhaps be harassed by media professionals seeking to take advantage of their views for media coverage. I would not consider either the data protection or the media concerns to be sufficient to justify making the order that is sought. However, the commercial sensitivity of the information is fully made out and justifies the making of an order for limited disclosure. BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII