“except in pursuance of the preceding provisions of this section, an approval given at a creditors’ meeting summoned under section 252(7) is not invalidated by any irregularity at or in relation to the meeting.”
“4.3 The acceptance of my Individual Voluntary Arrangement is conditional upon the acceptance of the Arrangement for my wife/husband, following acceptance the estates shall be combined for dividend purposes and treated as one. I propose that, during the term of Arrangement the Supervisor will be paid a combined contribution for the benefit of the creditors not less than:-£250 per month for the first year -£3,000 year total£300 per month for the second year -£3,600 year total£350 per month for the third year -£4,200 year total£250 per month for the first year -£3,000 year total£300 per month for the second year -£3,600 year total£350 per month for the third year -£4,200 year total£400 per month for the fourth year -£4,800 year total£400 per month for the fifth year -£4,800 year total 7. ________________ 8. Total contributions -£20,400 total =============== 9. My monthly contributions are to begin no later than 28 days from my Proposal being accepted. If any voluntary contribution falls 60 days in arrears or falls below the amount specified in the proposals accepted by creditors, this shall be taken as a failure of the arrangement and the Supervisor will petition for bankruptcy. The Supervisor will set aside sufficient funds for this purpose.”
“A contribution will be made by Mrs Rekha Atulkumar Parekh in accordance with the terms of her proposal. On that basis it is estimated that our joint unsecured creditors will receive a dividend of 70.09p in the £ and my personal creditors will receive a dividend of 32.91p in the £.”
“I anticipate that a dividend of approximately 32.91 pence in the pound will be paid to unsecured creditors in a Voluntary Arrangement compared to 4.35 pence in the pound in a Bankruptcy Administration. As indicated earlier, I believe the costs of a Voluntary Arrangement will also be less than the costs of a Bankruptcy Administration. Joint Unsecured Creditors will receive a dividend of approximately 70.09 pence in the £ from myself and my wife.”
“Clause 4.3 is to be substituted with “I agree to pay the Supervisor for the benefit of the creditors not less than£230 per month for the duration of the Voluntary Arrangement.”
“Please ensure that a copy of the report of the meeting is sent urgently to this office.”
“… to my mind however it would have been clear, from the report to Mr Parekh’s creditors, that, save in the case of National Westminster Bank, the votes of the creditors had been cast in favour of the Modification (and the other small modifications) and it would have been clear to HMRC that its votes were required to and did bring about the IVA. The report included a copy of the list of modifications and voting details. In the absence of evidence to the contrary it is a reasonable inference (which I make) that all the creditors received a copy of the report shortly after20 December 1999 . HMRC appears not to have raised any objection to Mr Wootton’s exercise of its proxy at that stage (or at any time afterwards).”
“Although, in construing the IVA, I am required to read the Proposal together with the Modification, I am not required to reconstitute the Proposal and the document containing the Modification as one document. Nor am I required or is it appropriate, in my view, to ignore the reality that the Proposal was drafted first and the Modification was drafted later.”
“120 The diversity of authority, of which Diplock J spoke, renders it difficult for a judge of first instance to recognise when recourse to deleted words may properly be made. The tenor of the authorities appears to be that in general such recourse is illegitimate, save that (a) deleted words in a printed form may resolve the ambiguity of a neighbouring paragraph that remains; and (b) the deletion of words in a contractual document may be taken into account, for what (if anything) it is worth, if the fact of deletion shows what it is the parties agreed that they did not agree and there is ambiguity in the words that remain. This is classically the case in relation to printed forms (Mottram Consultants, Timber Shipping, Jefco Mechanical Services), or clauses derived from printed forms (Team Service), but can also apply where no printed form is involved (Punjab National Bank Ltd). 121 Support for that view may be found in the latest edition of Keating on Building Contracts which contains the following passage: ‘In this confusion the second school is generally to be preferred. Where parties have made a contract in a document that contains deletions, to look at the deletions does not offend the principle discussed above which prevents reference to preliminary negotiations. The deletion is physically contained in the concluded contract. It is submitted that the court should first construe the retained words. If they are unambiguous, reference to the deletions is unnecessary. If they are ambiguous reference to deletions from printed documents should be permitted to see whether objectively they throw light on the meaning of the retained words.’ 122 Even if recourse is had to the deleted words, care must be taken as to what inferences, if any, can properly be drawn from them. The parties may have deleted the words because they thought they added nothing to, or were inconsistent with, what was already contained in the document; or because the words that were left were the only common denominator of agreement, or for unfathomable reasons or by mistake. They may have had different ideas as to what the words meant and whether or not the words that remained achieved their respective purposes. 123 Further, as Morgan J pointed out in Berkeley Community Villages Ltd v Pullen[2007] EWHC 1330 : ‘Even in the case where the fact of deletion is admissible as an aid to interpretation, there is a great difference between a case where a self contained provision is simply deleted and an another case where the draft is amended and effectively re-cast. It is one thing to say that the deletion of a term which provides for “X” is suggestive that the parties were agreeing on “not X”; it is altogether a different thing where the structure of the draft is changed so that one provision is replaced by another provision. Further, where the first provision contains a number of ingredients, some assisting one party and some assisting the other, and that provision is removed, it by no means follows that the parties intended to agree the converse of each of the ingredients in the earlier provision” ‘In this confusion the second school is generally to be preferred. Where parties have made a contract in a document that contains deletions, to look at the deletions does not offend the principle discussed above which prevents reference to preliminary negotiations. The deletion is physically contained in the concluded contract. It is submitted that the court should first construe the retained words. If they are unambiguous, reference to the deletions is unnecessary. If they are ambiguous reference to deletions from printed documents should be permitted to see whether objectively they throw light on the meaning of the retained words.’ 122 Even if recourse is had to the deleted words, care must be taken as to what inferences, if any, can properly be drawn from them. The parties may have deleted the words because they thought they added nothing to, or were inconsistent with, what was already contained in the document; or because the words that were left were the only common denominator of agreement, or for unfathomable reasons or by mistake. They may have had different ideas as to what the words meant and whether or not the words that remained achieved their respective purposes. 123 Further, as Morgan J pointed out in Berkeley Community Villages Ltd v Pullen[2007] EWHC 1330 : ‘Even in the case where the fact of deletion is admissible as an aid to interpretation, there is a great difference between a case where a self contained provision is simply deleted and an another case where the draft is amended and effectively re-cast. It is one thing to say that the deletion of a term which provides for “X” is suggestive that the parties were agreeing on “not X”; it is altogether a different thing where the structure of the draft is changed so that one provision is replaced by another provision. Further, where the first provision contains a number of ingredients, some assisting one party and some assisting the other, and that provision is removed, it by no means follows that the parties intended to agree the converse of each of the ingredients in the earlier provision”
“The essence of ratification is a decision by the principal to adopt the unauthorized act as his own … It does not therefore depend on communication with or representation to the third party and is thus in principle distinct from estoppel, but since the intention to ratify must be manifested in some way it will in practice often be communicated to and relied upon by the other party to the transaction. Ratification can no doubt be inferred without difficulty from silence or inactivity in cases where the principal, by failing to disown the transaction, allows a state of affairs to come about which is inconsistent with treating the transaction as unauthorized. That is probably no more than a form of ratification by conduct.”
“except in pursuance of the preceding provisions of this section, an approval given at a creditors’ meeting summoned under section 257 is not invalidated by any irregularity at or in relation to the meeting.”
“Of course, the section presupposes that there may have been material irregularities, which might indeed be such as to invalidate the meeting under the general law as regards meetings. So it may be that the section limits (by time) the raising of objections to what might otherwise be found to be a completely invalid meeting. In such a case one may have to understand the words ‘such a meeting’ in s.262(1)(b), referring across to a ‘a creditors’ meeting summoned under s.257’ in s.262(1)(a), as including reference to a meeting purportedly (albeit irregularly) summoned under that section. But where there has not been a hearing to consider the report at all, under ss.256 and 257, I do not see how the meeting can be considered to have been even purportedly summoned under s.257. Accordingly, it does not seem to me that the individual voluntary arrangement is to be regarded as beyond challenge by virtue of s.262 (8).”
“[27] In my view, there is a difference between circumstances which give rise to something which may be described as a material irregularity and something which invalidates approval or means that approval was simply never achieved. I put this example to Ms Jordan. Take a case where the chairman wrongly calculates the votes and believes that 78% of creditors voted to approve an arrangement and reports to the court and the creditors and the debtor to that effect but in fact only 68% of creditors voted to approve. In one sense that is indeed a material irregularity. But it goes further, since as a matter of fact and of law the requisite majority was not attained such that in reality there never was approval. It cannot be that in those circumstances s.262(8) could be said to overcome the problem by making real that which simply never was. The reason it cannot is because of its wording, which presupposes approval: it is ‘an approval given at a creditors’ meeting’ which ‘is not invalidated’. Non-approval cannot, however, be transformed into approval. [28] For the reasons I have given I conclude that Ms Plummer’s proposal for an individual voluntary arrangement was not approved and that it is … a nullity and void. It follows that Mr Penn had no locus to present the petition that is before me and that it must be dismissed.”
“23 I have considerable doubts as to the correctness of In re Plummer[2004] BPIR 767 . It seems to me that the statutory framework with which I am concerned permits a challenge to be made under section 262, within a limited time, and that that procedure is meant to be exhaustive, precluding other forms of challenge, as subsection (8) confirms expressly. Section 262 in terms applies to a case where there has been “some material irregularity at or in relation to” the creditors’ meeting. The words could hardly be wider. The time for making a challenge runs from the making of the report to the court or (in the case of a person who was not given notice of the meeting) when he becomes aware that the meeting has taken place. If there is some error or inaccuracy in reporting the outcome of the meeting that is properly described as an irregularity “in relation to” the meeting, to which section 262 is meant to apply, even if the error or inaccuracy occurs after, and not at, the meeting. 24 The argument against that is that, on a literal reading of section 260, the approved arrangement only takes effect “where the meeting summoned under section 257 approves the proposed voluntary arrangement (with or without modifications)” and that section 262(8) is similarly limited. It is said that in cases such as In re Plummer and the present case the meeting itself did not approve the IVA, because there was in fact no 75% majority in favour of the proposals as purportedly approved. 25 In my judgment, it is necessary to look at the structure of this part of the 1986 Act as a whole. The critical stage is the report of the decision to the court under section 259. The result of the meeting as stated in that report is obviously meant to be taken at face value and accepted subject to any challenge brought timeously under section 262 or the 1986 rules. That is why section 262 is there and why the Rules make separate provision for the conduct of meetings, with a similar time limit.”
“29 I respectfully differ from what Mr Registrar Baister says in that paragraph. The example he gives is a powerful one, but is no different in substance to another common example, where a creditor is allowed to vote at the relevant meeting and his debt is marked as objected to because it is disputed. Let us suppose that that creditor’s vote is decisive in defeating the IVA The debtor can challenge the admission of that debt under section 262 and rule 5.22, and would be expected to do so, if he wished to challenge the outcome of the meeting at all. If it is the other way round and a proposal is carried on a wrongly admitted vote, any aggrieved creditor can also challenge the decision or appeal under the same statutory provisions. But let us suppose that no creditor in fact challenges the result. We are left with an IVA which has been approved on a disputed debt, which turns out later never to have been owed. Then, just as much in that case as in the example given by Mr Registrar Baister, it can be said that there never was, as a matter of fact and law, the requisite majority. It would follow that the debtor could, when in breach of the IVA, let us say two years later, turn round and say: “There was no IVA and I cannot be made bankrupt for being in breach of its terms”, thus making the time limited right of challenge or appeal redundant. It seems to me that that is such a startling result that it cannot possibly have been intended by Parliament and the draftsman of the Rules. For my part, I would not and do not construe this part of the 1986 Act or the rules as giving rise to those consequences. I would on the contrary construe section 262(8) and rule 5.22(6) as precluding that result. 30 Other examples highlight the startling consequences which would follow if the appellant’s submissions are correct. Thus, under section 258(4) a secured creditor’s rights are not to be affected except with the concurrence of that creditor. Let us suppose that an IVA is passed affecting the rights of a secured creditor who has not consented. The secured creditor could clearly complain. But, if he does not complain, it is, in my judgment, manifestly absurd that the debtor could challenge his own IVA two years or more later on the grounds that the concurrence was not obtained. Likewise, subsection (5) protects preferential creditors: the meeting may only approve proposals affecting them adversely with their concurrence. Again, if one preferential creditor is overlooked, the whole IVA may be automatically invalidated if this reasoning is correct. These are pertinent examples as they come from the same section as was under consideration in In re Plummer[2004] BPIR 767 , and one would expect the lack of consent from the debtor, the secured creditor and any preferential creditor to carry the same consequences, and be subject to the time limit prescribed for any challenge under section 262(3). 31 In my judgment, although I readily accept that my construction does some violence to the literal language, it seems to me that it is necessary to adopt a more purposive construction in order to avoid potential chaos. Shortly after theInsolvency Act 1986 came into force, the Court of Appeal in a case called In re Debtor (No 1 of 1987)[1989] 1 WLR 271 , approved the statement of Vinelott J in In re Debtor (No 190 of 1987) The Times,21 May 1988 , that“it would be unfortunate if the new provisions were to become enmeshed in the technical objections which disfigured the old law”.That concerned a supposedly defective statutory demand. The same must, in my judgment, apply to individual voluntary arrangements. 32 Unfortunately, the distinction between nullities and irregularities seems to have gained credence in the field of out of court appointments of administrators: see the decisions summarised in In re Euromaster Ltd [2013] Bs LR 466. There is, however, no need to extend tortuous reasoning of that kind into the area of individual voluntary arrangements, where both the statue and the 1986 Rules contain a code for challenging decisions at an early stage. If those decisions are not challenged, in my judgment, they should stand once the relevant report has been made. The time limits, which are tight, set out in both the Act and the Rules, should be applied and not subverted by a collateral attack months or even years down the line.”
“(4) the chairman has power to admit or reject a creditor’s claim for the purpose of his entitlement to vote, and the power is exercisable with respect to the whole or any part of the claim. (5) The chairman’s decision on entitlement to vote is subject to appeal to the court by any creditor, or by the debtor. (6) If the chairman is in doubt whether a claim should be admitted or rejected, he shall mark it as objected to and allow the creditor to vote, subject to his vote being subsequently declared invalid if the objection to the claim is sustained. (7) If on an appeal the chairman’s decision is reversed or varied, or a creditor’s vote is declared invalid, the court may order another meeting to be summoned, or make such other order as it thinks just. The court’s power to make an order under this paragraph is exercisable only if it considers that the matter is such as to give rise to unfair prejudice or a material irregularity. (8) An application to the court by way of appeal under this Rule against the chairman’s decision shall not be made after the end of the period of 28 days beginning with the day on which the chairman’s report to the court is made under section 259.”