Caldero Trading Ltd v Beppler & Jacobson Ltd & Ors

Neutral Citation Number: 2012 EWHC 4031 (Comm). IN THE HIGH COURT OF JUSTICE CHANCERY DIVISION COMPANIES COURT Claim No 3680 of 2012 Royal Courts of Justice 7 Rolls Buildings Fetter Lane London EC4A 1NL Date: 14 December 2012 Before: His Honour Judge Dight - - - - - - - - - - - - - - - - BETWEEN: CALDERO TRADING LIMITED - and - Claimant BEPPLER & JACOBSON LIMITED AND OTHERS Defendant - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Ms Angello appeared on behalf of the Claimant. Mr N Kitchener QC appeared on behalf of the Defendant. - - - - - - - - - - - - - - - - JUDGMENT JUDGE DIGHT: Thank you. I have before me two cross applications which raise as their central issue the proper construction of a provision of an order made by Mr Justice Newey on 16 July 2012, concerning the powers of the provisional liquidators of the first respondent who are referred to in this judgment as "BJUK". The issue is a narrow one. The factual background, to which I will turn in due course insofar as I need to, is much broader and more complex. The relevant part of the order in dispute is to be found at paragraph 4(2), which reads as follows: "Paragraph 7.2 [that being a reference made back to the order made by His Honour Judge Birss] shall be varied to provide as follows: "To locate, protect, secure, take possession of, collect and get in documents reasonably necessary solely for protecting and preserving the assets of the first respondent." These cross applications arise out of the fact that the provisional liquidators have asked the sixth respondent, who I will refer to as "Mr Telser", for delivery up to them of all the books and records of BJUK. Mr Telser has been a director of BJUK since 15 October 2010. He plays no part in these applications but it is his solicitors, Rooks Rider, who are said to hold on his behalf all the books and records of BJUK. By their application, the applicants, who are the third, fourth, fifth, seventh and eighth respondents, seek first a declaration that the provisional liquidators are not entitled to call for all the books and records of the first respondents and, secondly, by way of an alternative form of relief really, a declaration that, and I quote: "Such entitlement or obligation as they may have to call for any of the books and records pursuant to the amended paragraph 7.2 of the order shall be sufficiently met by their calling upon the solicitors to the applicants [who I interpose to say are Mishcon de Reya] to review fully all such books and records and to provide to the provisional liquidators such of those books and records as to disclose the existence of any assets which have not hitherto been identified to the provisional liquidators." By their cross application the provisional liquidators seek an order, among other things, pursuant to section 234 of the Insolvency Act 1986 that: "The respondent [and that is Mr Telser] shall forthwith, or within such period as the court may direct, deliver, convey, surrender or transfer to the applicants, or cause to be delivered, conveyed, surrendered or transferred to the applicants, all books papers and records of Beppler & Jacobson Limited and others BJUK as are in his possession or control." The provisional liquidators are supported in their stance in respect of these applications by the petitioner. The battleground between the parties is over the use of the word "all" in the provisional liquidators' request for the books and documents, as appears from the two passages from the cross applications which I have referred to. I turn then to look at the relevant background facts to this application against which I must consider the proper construction of the paragraph of Mr Justice Newey's order that I have already recited. Despite the very substantial and complex history to the dispute between the parties, it seems to me that I need to refer to very little of it to put the applications and the issue raised by them in their proper context. Nevertheless, it will undoubtedly take some time. BJUK is a company registered in the United Kingdom and Wales, incorporated on 7 November 2001. The shareholders are the petitioner, who I will refer to by its proper name "Caldero", a company registered in Cyprus that holds 25 per cent of the share capital. I am told that Mr Becirovic -- if that is how you pronounce his name, I hope correctly -- is the sole shareholder of the petitioner. The third respondent, whom I will refer to as "Leibson", a company registered in the British Virgin Islands, holds 70 per cent of the shares; and the fourth respondent, whom I will refer to as "Belinda", registered in Nevis, holds five per cent of the shares. BJUK in turn holds 100 per cent of the shares in the second respondent, whom I will refer to as BJM and that company is, therefore, a wholly owned subsidiary. BJUK in addition owns land in Montenegro, on which a stand a number of holiday resorts and villas. BJM itself is a company registered in Montenegro, incorporated in 2003 as a wholly owned subsidiary of BJUK, who operate the Montenegran business. It owns the buildings on the land owned by BJUK. The fifth respondent, Mr Lazurenko, is alleged to be the beneficial own of Belinda, and I will come back to him later on. Mr Telser, as I have already mentioned, is the sixth respondent and has been a director of BJUK since 2010. The seventh respondent, a company called Lawson Trading, whom I will refer to as "Lawson Trading", registered in Nevis, at one stage alleged that it was the owner of the assets which had appeared in the company accounts of BJUK. The eighth respondent, Mr Scheklanov is said by some to be the beneficial owner of Leibson and Lawson Trading. The other player that I should mention in this matter is a company I will refer to as TNK-BP, said to be a Russian oil company, which has made a claim against BJUK and others in separate proceedings alleging that it is entitled to the assets of BJUK as a result of the wrongdoing of Mr Lazurenko, a former employee, and it makes what I am told are restitutionary or constructive trust type claims to recover the assets which it says it has funded. TNK-BP and its related companies have also played this part in these proceedings: they have given cross undertakings in support of the interim relief which has been granted to the petitioner and they are funding the costs of the petitioner and the provisional liquidators by, as I understand it, putting money into BJUK, among other ways. The main TNK-BP proceedings are the subject matter of a 88- page judgment by Mr Andrew Sutcliffe QC, in which he discharged various worldwide freezing orders and he criticised the merits of all but one of their claims. There were separate proceedings brought by them against Mr Lazurenko concerning the use of documents, proceedings which need not trouble me any further. They were dismissed by the Chancellor on what has been described as a reverse summary judgment basis. The respondents, the applicants in this case, are very suspicious of TNK-BP's role and its relationship to others in this litigation. The relevant chronological background is that in 2001 or 2002, it is said that Mr Becirovic and Mr Lazurenko entered a joint venture agreement to own and operate a holiday business in Montenegro via BJUK and subsequently also involving BJM. Mr Lazurenko is said to have provided very substantial funding for the business. In 2010, there was a falling out, which ultimately appears to have led to the present petition. Of further relevance to the matters I have to consider are what have been referred to as agency agreements and amendments or variations of them, said to have been entered into between 2002 and 2005, which purported to give effect to an arrangement whereby all the assets of BJUK were owned by and held for third parties, such that BJUK was an empty shell. The filed accounts for BJUK to the years ending 30 November 2008 showed that it held -- that is BJUK held -- assets. The accounts for the year ending 30 November 2009, which were approved by Mr Telser on 24 March 2011, showed that the company had no assets because of what was referred to in a note to the notes as the agency agreements. The allegation behind them was that the true beneficial owner of the assets was Lawson Trading. The allged agency agreements themselves only came to light as a result of the order by His Honour Judge Birss, which I will refer to shortly. On 3 May 2012, the petition which commenced these proceedings was presented. It concentrates, really, on the breakdown of trust and confidence between the parties to the alleged joint venture agreement, seeks winding of up of BJUK on the just and questionable ground, alternatively for relief under sections 994 and 996 of the Companies Act 2006, unfair prejudice. In the body of the petition and in the points of claim relied on subsequently by the petitioner, it was asserted that the agency agreements were invalid and were null and void. On 3 May, after presentation of the petition and without notice to the respondents, His Honour Judge Birss QC made an order on the application of the petitioner, appointing the provisional liquidators in this case, in paragraph 7 of which he provided as follows, and I quote: "The provisional liquidators' functions, duties and powers shall extend to the following: "7.1. To locate, protect, secure and take possession of, collect and get in all property or assets of whatever nature to which the first respondent is or appears to be entitled, such assets and property not to be distributed or parted with by the provisional liquidator until further order, except pursuant to the functions hereby conferred. "7.2. To locate, protect, secure, take possession of and get in the books, papers and records of the first respondent, including the accounting and statutory records in whatever form. "7.3. To investigate the affairs of the first respondent. "7.4 to take such steps as they may consider necessary or expedient in order to ensure the good management and security of the assets and undertaking of the second respondent, including without prejudice to the generality of the foregoing, appointing or removing the officers of the second respondent and instructing lawyers, accountants and other professional persons, whether in this country or abroad. "7.5. To do all such things as may be necessary or expedient for the protection of the first respondent's property or assets. "7.6. Without prejudice to the generality of the foregoing to bring or defend or proceed with any action or other legal proceedings on behalf of the first respondent, and in its name, or his name as appropriate, for the purpose of exercising the above functions and, if so advised, to comprise such proceedings. "7.7. To make applications to foreign courts, including the court in Montenegro, in furtherance of the above powers. "7.8. To do all things necessary or incidental to the foregoing functions, duties and powers." Then various injunctions were granted against a number of the other respondents and in fairly standard form orders were made requiring certain of the respondents to provide information to the petitioner. The return date of that order was 17 May 2012, when the matter came before Mr Justice Floyd, who continued the order and directed that there be an expedited trial of the petition. It was around this time that the genesis of the current dispute emerged in correspondence to the provisional liquidator and Rooks Rider. By their request dated 18 May 2012, BDO LLP, of which the provisional liquidators are partners, asked Mr Telser formally for delivery up of all the company's books and records at his earliest convenience together with various other details of the company's bank accounts. By 11 June the provisional liquidators were represented by the solicitors who now represent them and they wrote to Rooks Rider, who by then represented Mr Telser, referring to the earlier letter, noting that the books and records had not been delivered up and reminding Mr Telser of their request. A meeting took place at which the books and records were discussed and Mr Telser promised, on the face of it, to be cooperative. On 21 June, in an email between the provisional liquidators and Mr Telser, details of specific documents were set out and the originals were demanded. In a formal reply dated 11 July 2012, Rooks Rider asserted that their client, Mr Telser, had been cooperating and referred to the books and records and queried whether some of the categories of documents that the liquidators were seeking were legitimate areas of concern for them. At about the same time, the amended points of defence were filed in the petition where the respondents, other than Mr Telser, admitted solely for the purposes of the proceedings, certain of the allegations contained in the points of claim. The admission took the form of assertion that the respondents did not take issue with the allegations made by the petitioners; in particular that admission covered the assertions about the agency agreements. The petition was due to come on for trial before Mr Justice Newey on 16 July 2012. The parties negotiated a settlement of the petition, the terms of which were recorded in his order of that day. They required certain relief from the court that could not be made by consent and, therefore, Mr Justice Newey must have formed a view about the merits of certain of the parties' positions and made various orders but it is common ground that the orders which are the subject matter of the dispute before me today are the product of negotiation between the parties and an agreement reached as a result of the negotiation. I only interpose to say, as I understand it, the provisional liquidators played no part in the settlement of the terms of the terms in dispute. The recitals specifically set out the parties’ consent to the orders being made. They contain the statement that the court was satisfied that it was just and equitable that the first respondent be wound up and that the affairs of the first respondent had been conducted in a manner unfairly prejudicial to the interests of the petitioner. The order declared that the purported agency agreements, as defined in the amended points of claim, to which I have already referred, are null, void and have no effect as against the first and second respondents. The mechanism which it gave effect to for settling the petition was that the third respondent should purchase the petitioner's shares in the first respondent, in BJUK, upon the terms set out in the schedule, which provided for an independent valuer to value these shares and for the purchase price to be paid. There was left outstanding one issue which has been referred to as the "investment issue" which needed to be -- and still needs to be -- determined by the court; that is as to whether certain funds provided to the company were put in by way of loan or by way of equity. The determination of that issue has an obvious effect on the value of the company and the price to be paid by the respondents to the petition. The orders contained as a long stop provision that if the sale did not complete within a limited period, which has not yet expired, the company should be placed in liquidation and out of the assets a certain amount of money, being the purchase price, should be paid to the petitioner. The reality is, having regard to the terms of the order, that although there has been a settlement and the parties have agreed that there would be a sale of the shares, the possibility of a liquidation continues to exist. The appointment of the provisional liquidators was continued but varied by paragraph 4 of the order, which reads as follows: "Paragraph 7 of the order of His Honour Judge Birss QC made herein on 3 May 2012 be varied as follows: "1. The sole purpose of the provisional liquidators shall be to protect and preserve the assets of the first and second respondents, and for that purpose alone they may exercise of powers in paragraph 7 of the order of 3 May 2012; but before exercising the powers in paragraph 7.4, 7.6 and 7.7, they shall give seven days' notice to the third to eighth respondents of the nature of the intended exercise and the grounds for it. "2. [which I have cited previously] Paragraph 7.2 shall be varied to provide as follows: to locate, protect, secure, take possession of, collect and get in documents reasonably necessary solely for protecting and preserving the assets of the first respondent. "3. The third to eighth respondents shall have liberty to apply in respect of any exercise or attempted exercise of the powers under paragraphs 7.4, 7.6 and 7.7 of the order of 3 May 2012, provided that they shall give two business days' notice to the petitioner of any such application and shall, save in relation to any application made without notice or if the court otherwise directs, serve upon the petitioner any evidence relied upon and the provisional liquidators shall serve upon the petitioner any evidence relied upon though in relation to such application. "4. The provisional liquidator shall not disclose to Caldero or to any third party any information or document obtained pursuant to their powers under paragraph 7, save (1) insofar as Caldero is legally entitled to information as a shareholder, or; save (2) as disclosure required by these proceedings, or; save (3) for the purpose of protecting and preserving the assets of the first and second respondents and, in any event, the provisional liquidators shall give seven days' notice to the third to eighth respondent of that intended provision of information." There then follows a proviso as follows: "Provided also that the sole purpose of protecting and preserving the assets of the first and second respondent (a) the joint provisional liquidators shall not, pending further order of the court, alternatively agreement between the petitioner on the one hand and the third to eighth respondents on the other hand, undertake any further investigation of the affairs of the first respondent, pursuant to paragraph 7.3." It is that order and those provisions that I have to look at in construing what has become the replacement paragraph 7.2 of the order of His Honour Judge Birss. In the course of submissions I was taken to what counsel said to Mr Justice Newey and to Mr Justice Warren on another occasion about the provisions of the order, but in my judgment those submissions are not relevant to construction of the words used in the order insofar as they purport to be the evidence of the intention behind those words. The intentions have in the usual way, in my judgment, to be garnered from the words used themselves in the relevant factual matrix. The theme of Mr Justice Newey's order was that the provisional liquidator's role was to continue, but limited to protecting and preserving the assets of the first and second respondents. Their powers to investigate were limited in the way that I have mentioned in the provision that I have referred to above. It is not in dispute that the provisional liquidators’ role thereafter was effectively to hold the status quo pending the outcome of the trial that was due to take place, and is due to take place, and pending the carrying into effect of the terms of settlement. Chronologically, the next relevant thing that happened in my judgment was that on 26 July 2012 Mr Telser wrote to Mr Becirovic and to other officers of the Montenegran company, BJM, having misunderstood the terms and effect of Mr Justice Newey's order, requiring them to stop providing information and documents to the provisional liquidators and to report to him. It is common ground that he misunderstood the order, and I note that the letter had not been written by his lawyers or, on the face of it, with the benefit of legal advice. On 14 August, Mishcon de Reya wrote to the provisional liquidators' lawyers concerning the request by the provisional liquidators to Mr Telser to deliver up the books and records of the company, and the suggestion that they were going to take proceedings to require him to do so. They say in the foot of the first page of the letter, in general terms, that the steps that the liquidators proposed to take went beyond the powers conferred on them by the order of Mr Justice Newey. The provisional liquidators, through their solicitors, not surprisingly took issue with that stance, pointing out in the first unnumbered paragraph of the letter that the books and records of BJUK are its property and not the property of Mr Telser and that he has no interest in retaining them. No surprise as to the resistance that they were experiencing. There had been an offer for the papers to be reviewed, which the provisional liquidators thought was inappropriate. The correspondence carries on between the parties identifying the refining of the extent of the dispute between them. Mr Telser's correspondence shows that he appeared to be allowing his solicitors to review the correspondence and the books and documents with a view to disclosing them to the provisional liquidators but eventually came to the conclusion that if the respondents were to issue the application that they were suggesting, that he would not ultimately hand over the documents. The application was issued on 24 September 2012, that is the first of the two applications before me. The provisional liquidator's application followed on 27 September 2012. The documents in dispute remain with Mr Telser's solicitors. Both sides have filed evidence in support of their respective positions but I need not refer to it in any detail. What I should set out extensively though is the evidence given by the provisional liquidators setting out their reasons for the stance which they have taken in seeking all the books and records of the company. That appears in paragraphs 21 to 23 of the third statement of Mr Williams, made on 7 November 2012, in which he said as follows. Paragraph 21: "Having considered the 16 July order, the provisional liquidator surmised that that function is supposed to be for them to act as independent guardians of the assets of BJUK. Such a function is wholly consistent with (a) the express wording of the 16 July order and the protect and preserve mandate which it contains, and; (b) the serious allegations of impropriety which have been levelled at the persons who would otherwise be responsible for BJUK's assets, including Caldero, the MdR Respondents and, perhaps most importantly, Mr Telser. The PL's position is that they cannot protect and preserve the assets of BJUK unless they have access to the documents which show the nature and extent of the relevant assets and the basis on which they are held. "22. What the MdR Respondents appear to suggest is that the PL should only be entitled to those parts of BJUK's records which shed light on the extent and location of its assets. The problem with this is that it raises the question of who ought to make the judgment call as to which of the books and records the PL should see and which ought to be withheld from them. The mechanism proposed is that the task should fall to MdR themselves. PLs regard this as being manifestly inappropriate for at least the following reasons: "22.1. MdR are solicitors for the MdR Respondents and are not, therefore, independent. It is also clear that the MdR Respondents regard the provisional liquidation as inherently undesirable and wish the PLs to have as little involvement and access to documentation as possible. They are therefore likely to err on the side of withholding the documentation rather than producing it to the PLs. "22.2. I should make clear that no criticism of MdR is intended. My point simply reflects the fact that they are likely to be subjective and/or finely balanced judgment calls to be made as to whether certain of the books and records fall within the limited category to which the MdR Respondents say the PLs are entitled. MdR are not independent and are therefore not the right people to be making the relevant judgment calls. By contrast, the PLs are independent by their very nature. "22.3. PLs are advised by Mr Tulser's lawyers that the books and records which Mr Tulser holds are now in their possession and have undertaken to obtain them pending the outcome of the 24 September application. They have been collated and reviewed. It is now proposed that they are again reviewed by MdR. Quite apart from the delay which has already ensued, the PLs cannot be assured that Mr Telser's lawyers hold all the books and records which Mr Telser has in his possession, or under his control, even they were delivered up directly to the PLs. I should point out that this concern is more than a speculative one. "Mr Telser has already delivered up what he claimed at the time to be the complete books and records of BJUK in his possession, only for it to emerge that he had not, in fact, provided anything approaching full disclosure. In this regard I refer to paragraph 25 of my first witness statement made in support of the PL's application for an order for delivery up of the BJUK books and records against Mr Telser. However, the PL stand a greater chance of being able to detect any gaps in the documents disclosed if they receive all the documents rather than a set filtered by MdR. "23. Any attempt to read the 16 July order so as to entitle the PLs to any part of the books and records of BJUK therefore creates a position in which one or other of the parties becomes responsible for deciding which documents the PLs will or will not see. Given the very high degree of mistrust between the parties, it would be surprising if that was the result which they intended to achieve. Further, it appears to the PLs to be an outcome which would be fundamentally contrary to the rationale of having them in office in the first place." So far as the assets of BJUK are concerned, I am told that there is at present no draft balance sheet and that the provisional liquidators have not formed a view as to what the assets of the companies are, even on a provisional basis. On the other hand, the respondents submit that there are no further unidentified assets. It is certainly apparent from the evidence that I have seen that there are questions that could properly be asked concerning the monies which were found in a Credit Suisse bank account, which were the subject matter of an earlier application under section 127 of the Insolvency Act, money said to come from a company called Laburia(?) Investment Trade SA, documents relating to which I am told have not been disclosed. Legitimate concerns, it seemed to me, have also been raised in respect of a funding request and a liability said to exist on the part of DJN to pay local taxes in Montenegro in the sum of EUR 3.2 million, a funding request which, for reasons that are not clear, was subsequently backed away from. The concerns demonstrated in the evidence over those assets and liabilities in my judgment show that the provisional liquidators continue to have a legitimate interest in identifying the assets and liabilities of the company. Turning, then, to the main arguments in respect of the provision that I am asked to construe, I have received very substantial skeleton arguments. I do not seek to reiterate what was said in them, but I hope I will do justice to them and the detailed oral submissions that were made helpfully on behalf of all parties by stating in short form what the rival contentions are. The respondents' primary submission is that the words of the relevant sub-paragraph, as amended by Mr Justice Newey's order, are plain words which the court should give effect to as part of the commercial bargain reached between the parties to the proceedings following arm's length negotiation. They say, in any event, notwithstanding the factual matters which I have just referred to, that all the assets have been identified and really no further steps are necessary to be taken by the provisional liquidators to fulfil their function. They further say, that in any event the petitioner is fully secured by the mechanism contained in the order, the details of which I have not set out in this judgment and, therefore, there is nothing further that the provisional liquidators need to do to protect the position of the petitioner. They say that the fact that this application has taken a considerable time to be brought on by the provisional liquidators means that there is no real danger to be dealt with by the court, or any form of relief that is necessary, but it seems to me that that is a question which potentially goes to any remedy that may be available rather than the construction of the provision itself. They point to what has been described in other submissions as the risk of inadvertent leakage, bearing in mind what they say is the close relationship between the petitioner, the provisional liquidators and the TNK-BP, which is said to give rise to the risk of inadvertent leakage of information from one group to another. I interpose to say there is no suggestion made by the respondents that the provisional liquidators or their advisers have in any way acted improperly or inappropriately. As the application makes plain, the respondents suggest that if effect is to be given to the provision in dispute then the appropriate way to do so is to allow Mishcon de Reya to review the documents, and that will avoid the risk of leakage and ensure that the provisional liquidators are given only those documents which, on a proper construction, paragraph 7.2 of the order allows them to seek. The provisional liquidators, on the other hand, say that they need all the documents belonging to the company in order to preserve and protect the assets of the company; that is to preserve and protect assets whether known or unknown. They accept that, without more, they have no further investigative role. They put this as their front and first argument: that it is for the provisional liquidators to form a professional view as to what documents are appropriate for them to perform their function and if, as a result, they form the view that they need all the books and records, that is the end of the matter. They say that the power contained in paragraph 7.2 stands in a different category to the other powers contained in the order as varied, which are to be exercised only on notice, or only with permission of the court. It was submitted that the powers contained in the order of Mr Justice Newey fall into three categories: those which have no other limit or conditions, such as the power to obtain documents; secondly, powers only to be exercised on notice, and; thirdly, powers to only to be exercised with permission. They say that this is a power without limit or condition and there is no question, they say, of a balancing exercise to be undertaken in this case before the power is exercised. The petitioner's position is that it supports the provisional liquidators and says that the provisional liquidator's decision can only be impugned on limited grounds but there is, in this case, no evidence of any grounds on which their decision can be impugned. They submit that it is not for the court to decide whether the documents fall within the words of the power: that is a matter for the liquidators themselves. I was reminded that the terms of the order made by His Honour Judge Birss appeared to be in unusually wide terms, and it was submitted that the order of Mr Justice Newey simply brought the powers of the provisional liquidators back into their usual bounds and limits. In conclusion, I have been taken to the provisions of the Insolvency Act, sections 234 and 236, which have some bearing on this matter, and a number of authorities and passages from textbooks which set out the scope of and limits on a provisional liquidator's powers. But, in my judgment, they only form part of the background material to the job which I have to undertake in this case, and that is to construe the provisions of paragraph 7.2. I want to deal with some ancillary matters before I turn to the question of construction. First, I accept that this is not a disclosure exercise and the court should not approach the questions that it is being asked today on exactly the same basis as it would a disclosure application. The approach is, in my judgment, to construe the provisions of paragraph 7.2 as amended, being, in my judgment, a refinement of the statutory powers conferred on provisional liquidators against the relevant factual matrix. In my judgment, the provisional liquidators from the time of Mr Justice Newey's order, however construed, still had duties as officers of the court which were set out in the order but were constrained by the terms of that order. I reject the submission that there were no further steps to be taken by the provisional liquidators, and none anticipated by the terms of the order. The terms of the order anticipated that the provisional liquidators would continue to have a role in this matter, and the fact that there may have been adequate security given for the petitioner's position is, in my judgment, irrelevant to my consideration of the extent of the liquidator's powers. I bear in mind that, as I mentioned earlier, even today the outcome of the petition is still uncertain. It is impossible, from where I am sitting, to work out today whether this matter will result in a purchase or a liquidation. In those circumstances, the role of the provisional liquidators continues. I should also reiterate the fact that there are no allegations of impropriety against the provisional liquidators. The assertion made against them is merely that they do not enjoy the power which they seek to exercise. In construing the provision, I, with the greatest respect, agree with and adopt what was said by Mr Justice Warren in his short judgment on 6 November 2012 on an unrelated application in this matter which came before him when he was asked to look at the terms of the order, and he said in a number of paragraphs as follows: "1. I just want to deal at the outset with the correct test to apply, which is something that Mr Cousins addressed a moment ago. Of course, his citation of Barclays Bank and also the decision in Lucking(?) show what a trustee should do, and I will take it for present purposes that a liquidator, or provisional liquidator, in ordinary circumstances should do the same. "As I have already observed, and as Mr Kitchener recognised, this is a most unusual case, in that we had provisional liquidators in office against the background of a complete settlement of the underlying petition in the shape of a share sale agreement and the order of Mr Justice Newey, which on any construction is clearly intended to cut down the powers which His Honour Judge Birss provided for." He says in paragraph 4: "The idea that the principal potential processor, in the shape of TNK-BP, is not to be treated as a commercial party as it is funding the petition and funding the provisional liquidators is somewhat fanciful. Having qualified the test that they would ordinarily apply by reference to the commercial background, I have to remember that the function of the provisional liquidators, both in terms of duty and powers, is expressly restricted to preservation and protection of the assets. To interfere with the day-to-day management of the company would be going beyond that, unless there was a clear risk of the value of the business being adversely affected by the way it is being managed. That is different from the provisional liquidators thinking that they or their nominees might be able to manage it in a more effective manner. "That does not provide a answer to what I should do today but it points in the direction of interfering with the status quo only if it is clear that it should be interfered with." In paragraph 8 he reiterated his view that this was a commercial agreement come to by the parties which the court should hesitate to interfere with, recognising in paragraph 9 that this is an issue that is likely to trouble the court on future occasions in this case. This is, in my judgment, a commercial bargain in the context of a statutory regime, and I am invited to construe the provisions in accordance with the well known speech of Lord Hoffmann in the Investors Compensation case, and it seems to me that is absolutely right. I bear in mind that His Honour Judge Birss' order was, in my judgment, framed in relatively wide terms conferring wide powers. When one looks at the contrast between the words used in the provision 7.2 in his order and those contained in the order as varied by Mr Justice Newey, there is undoubtedly a reduction in the extent of the duties and powers of the provisional liquidators, and that reduction must be taken to have been a deliberate reduction. 68 At the beginning of both provisions, the same words appear: "To locate, protect, secure, take possession of, collect and get in." There then follows a difference between the two provisions. In Mr Justice Newey's order, the word "documents" standing alone appears. In the order of His Honour Judge Birss, the words, "... the books, papers and records of the first respondent, including the accounting and statutory records in whatever form" appears. There is some dispute as to whether the word "documents" was intended to be a widening of the expression of the categories of documents referred to in His Honour Judge Birss' order, and my attention was drawn to the fact that provisional liquidators have powers in certain circumstances to seek an order to require the delivery up of documents from third parties. But in the context of this case, it seems to me that there is nothing to detract from what would be the ordinary meaning of the word “dorcuments” in the context here; namely that it was intended to replicate by way of shorthand the words which had been used by His Honour Judge Birss in his order and means, in my judgment, the books, papers and records of the first respondent, including the accounting and statutory records in whatever form. Fortunately, as I understand it, nothing turns on the distinction in this particular case. There then appear in Mr Justice Newey's order three sets of qualifying words which, in my judgment, place a very clear limitation on the extent of the provisional liquidator's powers. The first are the words "reasonably" and "necessary"; secondly "solely", and; thirdly, "... for protecting and preserving the assets of the respondent". The purpose of the power is plainly, as is consistent with the rest of the body of the order, to be exercised for the purpose of protecting and preserving the assets of the respondent, which it seems to me is recognised by the provisional liquidators, and they accept that it does not entitle them to investigate without more. The word immediately preceding that phrase identifying the purpose is "solely", which indicates very clearly in my mind that the draftsman intended that the power should be exercised for the purpose subsequently expressed and no other. It may be thought to be a word which is otiose, but it underscores, in my judgment, the fact that this power was intended deliberately to limit the rights of the liquidators. Thirdly, the limited purpose was itself further limited, in my judgment, by the words "reasonably" and "necessary", so that even if the documents are solely for protecting and preserving the assets of the respondent, the power can only be exercised if such documents are reasonably necessary for that purpose and no other purpose. So a series of judgments have to be undertaken as a result of this provision. The effect of this combination of words is, as I have already said, to cut down deliberately the previously relatively wide power enjoyed under His Honour Judge Birss' order. The submission relating to the three categories of powers in Mr Justice Newey's order does not, in my judgment, affect the true construction. The provision by its own clear words, which I have just set out, expressly limits the power. The argument concerning the three categories of powers goes not to the extent of the power or its existence but to its exercise or intended exercise. Once the extent of the power has been determined, in this case so far as 7.2 is concerned, there is no balancing exercise to be undertaken. But the powers conferred by clause 7.2 cannot be exceeded because that would be beyond what the provisional liquidators are entitled to do. The conclusion might be surprising, bearing in mind that prima facie the provisional liquidators have a right to call for all the books in which the company has a proprietary interest, but that prima facie right has, in my judgment, been deliberately cut down by the terms of paragraph 7.2. Their entitlement is, therefore, to categories of document which fall within the definition. It follows that the provisional liquidators have no right, in my judgment, to call for documents which do not fall within the category as defined. The question then arises as to who is to decide whether they do or not. Ms Agnello QC submits it is for the provisional liquidators to decide. They have done so, they want more, that is their professional judgment and she says that is an end of the matter. In that respect she is supported by Mr Hollington QC. I am afraid I disagree. Those submissions on the professional view being the beginning and the end of the matter do not satisfy me for the following reasons. First, it seems to me that the submission puts the cart before the horse; the starting point must be a determination of the extent of the power enjoyed by the provisional liquidator. Just because the provisional liquidators might have formed the view that that they are entitled to call for certain categories of documents (in this case all of them) does not lead to the conclusion that that is the proper construction of the power. They might, in theory, be entitled to all the books and records but only if the books and records fall within the description of the documents for which they are entitled to call on the proper construction of the power. Mr Kitchener QC made the point in argument that if there happened to be in all the books and records a birthday card, it could not possibly be said that that document was reasonably necessary solely for protecting and preserving the assets of the first respondent. It therefore follows that the provisional liquidators would not be entitled to call for the birthday card. The effect of them calling for all the documents would include the birthday card. The argument that because they want all the books and records that they are entitled to them does not, in my judgment, bear scrutiny. Secondly, this particular provision does not, unlike others elsewhere in the two orders, say that it may be exercised if the provisional liquidators form a particular view. It is, on the face of it, a limited power. Thirdly, while I accept that the provisional liquidators need to identify the assets and liabilities of the company, that does not, on the plain meaning of the order, entitle them to go on a fishing expedition. Just because they do not know what the documents may be, cannot entitle them to say they want them all. Fourth, and in any event, I am not satisfied, from the passage in the witness statements that I have quoted, that the provisional liquidators have considered the right question or focused on the task in hand. Insofar as they may have failed to consider precisely what documents they need to undertake their task, having regard to the limitations placed on their power by paragraph 7.2, it seems to me that they will have misdirected themselves. I agree with Mr Kitchener that the reason contained in the passage I have cited from the provisional liquidators’ evidence does not provide rational support for the assertion that they need all the documents in the light of what I consider to be the proper construction of the provision. For those reasons it follows, in my judgment, that I should make the declaration sought by the respondents in paragraph 1 of their order. The question then arises as to what, if any, order I should make in respect of the documents to which the provisional liquidators are undoubtedly entitled. So far as the second part of the respondents' application is concerned, I am not satisfied that it would be an appropriate remedy in the circumstances. While I do not adopt the criticisms made of the proposal by the provisional liquidators, it does seem to me inappropriate that a third party representing others in hostile litigation should be given the task of filtering documents -- which, perhaps, is an unkind word for reviewing and selecting -before handing them over to those who, under the terms of the order, have an undoubted right to them. Which brings me on to the provisional liquidator's application. It seems to me that they are not entitled, as I have already said, to go on a fishing expedition but they are entitled to make a request for specific documents falling within the categories covered by the power as I construe it. If those documents, once disclosed, show that there are further trains of enquiry, then further requests can be made. Subject to hearing further argument from counsel, bearing in mind that I know that there is in existence a draft list of categories of documents which the provisional liquidators would like to obtain, I am prepared to make an order against Mr Telser in a more limited form. If, having made an order in a more limited form, he chooses to hand over all the books and records, it seems to me he could not be criticised, but I am not prepared, for the reasons I have already expressed, to make an order that he does hand over all the books and records of the company. In concluding, therefore, I will grant the declaration that the respondents seek in paragraph 1.1 of their application. I decline to make the declaration in paragraph 1.2. I decline to make the order in the form currently drafted in paragraph 2 of the provisional liquidators' application but I will make an order in a more limited form subject to argument.