Webb v Eversholt Rail Limited

The matter came on appeal before Sir Anthony Mann, sitting as a High Court Judge, who upheld her decision (Webb & Anor v Eversholt Rail Ltd & Anor [2026] EWHC 101 (Ch)). He rejected no fewer than 10 grounds of appeal relied on by the liquidators. They are detailed and case-specific, so, with one exception, are not considered here. Of greater relevance to insolvency professionals are the judge’s general comments about what a liquidator has to establish to get relief of the kind sought in the case before him (see paragraphs 21-32 of his judgment). As he put it,

“[A]t the heart of this appeal is the question of what the liquidators have to show…where it is said that the liquidators are seeking to reconstitute the company’s knowledge.”

Leading counsel for the liquidators submitted that it was not necessary to show more than that the liquidators had a reasonable requirement for the documents; alternatively, if the liquidators had to show a reasonable requirement, then the mere fact that they were seeking to reconstitute the company’s knowledge was itself, and without more, a reasonable requirement. “The point arises,” the judge noted, “because of the relatively unusual circumstances of this case where a third party, by arrangement with the company, has all the company documents – in effect,” and the only other sources of knowledge were what was in the directors’ heads and, perhaps, what was in the heads of employees of two companies, Eversholt Rail Ltd and Eversholt Rail (365) Ltd, both described as sister companies in the Eversholt UK Rail Group.

The judge rejected the submissions of counsel for the liquidators, holding that in his view liquidators had to establish a reasonable requirement for documents or information under both ss 235 and 236, and needed to do so in the case before him, although he conceded that there could be circumstances in which liquidators could establish, on the facts, that their need to reconstitute the company’s knowledge justified very extensive disclosure (called “everything forever” disclosure in the judgment), because, on the facts, that was a reasonable requirement; “but,” he went on, “they must do more than point to the fact that someone has extensive knowledge that they want – they must establish a reasonable requirement for what they seek.” He made a number of points that led him to that conclusion.

(1) The first, which he described as the most basic point, was that s 235 itself made the need clear by using the words “such information … as the office holder may … reasonably require.” Whilst the same words did not appear in s 236, it would be anomalous if the same requirement were not also required to justify relief under that provision, which was potentially directed at third parties not linked to the company in liquidation by office, employment or services and who were therefore “more remote from the company,” making it unsurprising that there was case law to that effect (he referred in support of that to the House of Lords decision in Re British & Commonwealth Holdings plc v Spicer & Oppenheim, Kitchin J’s judgment in Green v BDO Stoy Hayward LLP and the decision of Mr Registrar Briggs, as he then was, in Re Corporate Jet Realisations Ltd).

(2) Secondly, there was a distinction between “purpose” and “requirement.” By reference to Cloverbay Ltd v BCCI Ltd and British & Commonwealth  he recognised that one of the underlying purposes of ss 235-236 was to reconstitute knowledge for office-holders who were, by the nature of their position, “incomers” to the company, but, went on to say,

“[T]he reference [in the case law] to reconstituting was not said to be a sufficient requirement; it was said to be the underlying purpose. Those two matters are different. The two statutory provisions are the means of achieving that purpose, and have their own limitations or qualifications. It is not sufficient to express the reconstituting purpose. Furthermore so far as section 236 is concerned, reconstituting is not even a necessary factor or limitation, as British & Commonwealth makes plain.”

(3) If it were the case that reconstituting was itself a reasonable requirement, “that would be position in every case, so that all an office-holder would have to establish is that single matter. That would not be consistent with the above authorities, or the express wording of section 235. There may be some cases where an officer-holder would be able to rely on just that, but he/she would have to make out, on the facts, that that reconstituting was, without more, a reasonable requirement.”

The judge also reminded himself that ICC Judge Burton’s decision was an evaluative one, so the principles in Re Sprintroom applied: the appeal court did not carry out a balancing task afresh but had to ask whether the decision of the judge below was wrong by reason of some identifiable flaw in his or her treatment of the question to be decided, “such as a gap in logic, a lack of consistency, or a failure to take account of some material factor, which undermines the cogency of the conclusion.” That was not the case here.

Applying the foregoing to the individual grounds of appeal advanced, the judge went on to reject them. He also found that, as part of her process of evaluation, the judge had been entitled to conclude, as she had, that the liquidators had not made out their case for “everything forever,” so her evaluative finding to that effect was not open to appeal.

One matter raised under the 10 grounds of appeal by way of specific criticism of the judgment of the first instance judge is, perhaps, worth a mention (it is dealt with under grounds 9 and 10). It went to whether the possibility of making an order narrower in scope than that applied for would have enabled the liquidators to obtain some relief as opposed to none so should have been considered by ICC Judge Burton. That did not succeed because the submissions to the ICC judge had “focused on the need to see everything because the liquidators had nothing;” there was only one reference in the course of the hearing to the possibility of making an alternative, lesser order, and that, in Sir Anthony’s view, amounted to no more than floating a possibility. It did not seek to go into a lesser order and justify making one in terms of a proper focus on what documents were required and why they were reasonably required:

“It would have been open to [ICC Judge Burton] to have considered the possibility of considering the lesser order, and perhaps giving the parties an opportunity to consider and advance such a case, but she was not obliged to do so and it is not surprising that she did not. She was entitled to address the case made to her, and that is what she did.”

This article is for general information purposes only and does not constitute legal advice or a comprehensive statement of the law. Specific legal advice should always be sought in relation to individual circumstances.

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