Clarence Cafe (in administration) v Comchester Finance (1998)
Whether, following the making of an administration order against a tenant, the landlord could lawfully, peaceably re-enter without the leave of the court and whether such a peaceable re-entry was either enforcement of security or legal process under s.11(c) or (d) Insolvency Act 1986.
The plaintiff sought to restrain the defendant landlord from proceeding under purported re-entry in respect of commercial premises. The plaintiff went into administration pursuant to a court order made under s.11 Insolvency Act 1986 and the defendants effected a peaceable re-entry on the basis of non-payment of rent, not having come to the court for leave prior to effecting that re-entry. The main issue which arose was whether, following the making of the administration order, the landlord could lawfully, peaceably re-enter without the leave of the court. Section 11(c) of the 1986 Act provided that no other steps could be taken to "enforce any security over the company's property" without the consent of the administrator or the leave of the court and s.11(d) provided that no other proceedings and no execution or other legal process might be commenced or continued, and no distress levied against the company or its property without the consent of the administrator or the leave of the court. The court had to establish whether a peaceable re-entry, which was not specifically referred to in the section, was either enforcement of security or legal process. If it was neither, then it could be done with impunity. On both issues there was a clear conflict of view among judges of the Chancery Division.
(1) In order to make this security for the purposes of s.11 of the 1986 Act, a wider and non-technical meaning would have to be adopted for that expression as it was clearly not security in the true sense. Looking at the statute as a whole, the wider meaning was inappropriate and there was nothing in the statute that indicated that it should have a different meaning in different places. This point was now settled, below the Court of Appeal, by the most recent Chancery Division case Razzaq v Pala & Anor (1997) 1 WLR 1336. (2) It was held in Re Fanshaw & Yorston, ex parte Birmingham and Staffordshire Gaslight Co (1871) LR 11 Eq 615 that distress for rent could not be included in "legal process" as no legal process was necessary. Based on this, the judge held in Re Olympia & Canary Wharf Ltd (1994) EGCS 36 that "other legal process" involved in some way something proceeding in or out of proceedings in court. The judge agreed with this decision and followed it. (3) The plaintiff therefore failed on both issues and the motion was dismissed.