Chancery Division

Published April 6, 2007

Exeter City Council v Bairstow and Others

Before Mr Justice David Richards

Judgment March 2, 2007

Nondomestic rates which had accrued on occupied business premises during a company’s administration were payable as expenses of the administration.

Mr Justice David Richards so held in the Chancery Division in declaring on an application by Exeter City Council that nondomestic rates in respect of premises occupied by the third defendant, Trident Fashions plc, during the company’s administration, were payable by the administrators, the first and second defendants, Vivian Bairstow and James Martin, as expenses of the administration under rule 2.67(1) of the Insolvency Rules (SI 1986 No 1925), as substituted by the Insolvency (Amendment) Rules (SI 2003 No 1730)).

In 2003, Trident Fashions, a retail company, went into administration and the first and second defendants were appointed as administrators. During the course of the administration, they continued with the occupation of the business premises and continued to carry on the business as the company’s agents.

The company was eventually wound up. The nondomestic rates on the premises had accrued at a daily rate of approximately £136. Exeter City Council applied for a declaration that those rates were payable to it as expenses of the administration. Mr William Trower QC and Mr Paul French for Exeter; the administrators did not appear and were not represented; Mr Nicholas Briggs as advocate to the court.

MR JUSTICE DAVID RICHARDS said that rule 2.67(1)(f) which covered “any necessary disbursements by the administrator in the course of the administration” was drafted in the same terms as rule 4.128(1)(m) which dealt with “necessary disbursements” in a liquidation.

The reasonable inference was that, by adopting the same terms for rule 2.67, the rule-making authorities had made a policy decision and intended that rule 2.67 should carry the same meaning as rule 4.128 for the purposes of expenses in an administration.

Accordingly, just as rates were payable in a liquidation as “necessary disbursements” under rule 4.128(1)(m), so were they payable in an administration under rule 2.67(1)(f). Solicitors: Stones, Exeter; Treasury Solicitor.

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