Bulletins | December 1, 2023

Wedlake Bell succeeds in case where court finds that dishonest assistance can fall within the s.212 Insolvency Act 1986 gateway

On 29 November 2023, Deputy Insolvency and Companies Court Judge Agnello KC handed down judgment on an interim application arising in the case Re Gamenation UK Limited; Kelsall & another v Stajic & another [2023] EWHC 3020 (Ch,). Wedlake Bell LLP and Faith Julian, 9 Stone Buildings, acted for the liquidators.

The decision can be added to a growing list of authorities wherein the court has determined whether a cause of action advanced within an Insolvency Act application should instead have been brought by way of CPR Part 7 claim form.

On this occasion the relevant cause of action was one of dishonest assistance, with the applicant liquidators having cited section 212 Insolvency Act 1986 (IA 86) to justify such a claim’s inclusion in an Insolvency Act application brought in their own names.

Context – the relevant statutory provision

Section 212 IA 86 is the well-known statutory gateway frequently used by liquidators to advance company claims against directors by way of Insolvency Act application rather than by CPR Part 7 claim form – with the latter process having (amongst other things) a higher, and sometimes prohibitory, level of court fees.

To quote the final sentence of section 212(1), the provision applies when someone falling within the provision “has misapplied or retained, or become accountable for, any money or other property of the company” with the court being empowered under section 212(3) to compel such person to:

“(a) repay, restore or account for the money or property or any part of it, with interest at such rate as the court thinks just, or

(b) contribute such sum to the company’s assets by way of compensation in respect of the misfeasance or breach of fiduciary or other duty as the court thinks just”.

Whilst the provision is heavily associated with claims against directors, section 212 IA 86 is broadly drafted and it is clear from the various sub-paragraphs within section 212(1) that it is not just directors, whether de jure or de facto, who may be pursued. Thus, for example, section 212(1)(c) makes it clear that, quite apart from directors, the gateway is capable of being used against someone who has been “concerned or taken part in the promotion, formation or management of the company”.

What happened

In Re Gamenation UK Limited, the liquidators issued a claim by way of Insolvency Act application against two respondents, the first of which (R1) was said to be a de jure director. It was alleged that the second respondent (R2), not a de jure director, had dishonestly assisted R1 in the commission of breaches of fiduciary duty. The respondents applied to strike-out the claim on multiple grounds including that the claim against the R2 could not be advanced in the name of the liquidators using the section 212 IA 86 gateway. The liquidators then applied to amend their case and added a new claim against R2 alleging she had been a de facto director and had breached her duties to the Company. Nevertheless, the claim that R2 had dishonestly assisted R1 remained.

By the time the strike-out application came to be heard before Deputy Insolvency and Companies Court Judge Agnello KC, virtually all of it had been withdrawn. The sole remaining substantive issue was whether the claim for dishonest assistance against R2 should be struck out on the grounds that it could not fall within section 212 IA and thus should have been advanced by way of CPR Part 7 claim form in the name of the Company.

The liquidators’ case was that R2 had been concerned or taken part in the promotion, formation or management of the Company within the meaning of section 212(1)(c) and that, in dishonestly assisting R1 make unwarranted payments of the Company’s money, R2 had, amongst other things, become accountable for the Company’s money within the meaning of the final sentence of section 212(1). It followed, said the liquidators, that R2 could and should be compelled to repay, restore or account for the money pursuant section 212(3)(a).

The respondents’ position was that accessory liability claims, such as dishonest assistance or knowing receipt, could not fall within section 212 IA and that it was implicit in the statutory provision that a person could only fall within those specified in section 212(1) in respect of their own breach of duty and not for having assisted in someone else’s breach of duty. The respondents also argued that the remedies available to the court as set out in section 212(3) could not apply to an accessory since such an accessory would have neither committed their own breach of duty nor received the company’s money or property. The respondents said that although a dishonest assister may be accountable “as though” they owed a relevant duty, this did not mean that such an accessory actually became accountable for company money or property.

The decision

Having reviewed the relevant authorities and analysed the statutory provisions in some detail, Deputy Insolvency and Companies Court Judge Agnello KC rejected the respondents submissions. She held that section 212 was not restricted to those in breach of duty owed to the relevant company or in breach of trust. Moreover, she held that the provisions of section 213(3) were consistent with the remedies relating to dishonest assistance. As a result, the remaining part of the respondents’ application to strike out the claims failed.


This case appears to be the sole authority addressing whether a claim for dishonest assistance can be pursued by way of Insolvency Act application in reliance on section 212 IA 86. Whilst the decision is manifestly not an authority for the proposition that liquidators can always use the section 212 IA gateway in bringing claims against dishonest assisters, office holders can take some comfort that, in appropriate circumstances, such claims can be so advanced without having to issue a separate CPR Part 7 claim in the name of the company. In practice, as in Re Gamenation UK Limited, claims for dishonest assistance often arise in conjunction with claims against directors. Accordingly, as a decision which may, on occasions, help reduce the need for multiple originating process in different divisions of the same court in dealing with substantially overlapping claims, it is to be welcomed.

It is to be noted that the judge did not go onto deal with the supplementary question of what she would have ordered had she decided the relevant point against the liquidators. Accordingly, this case does not add to the not inconsiderable list of authorities addressing the consequences of a claim being issued using the incorrect procedure.

To read the full judgement hearing please click here.