Supreme Court – Appointed Administrator not an Officer of a Company

In the case of R (as per the Palmer application) v Northern Derbyshire Magistrates’ Court [2023] UKSC 38, the Supreme Court ruled that an individual appointed as an administrator under the Insolvency Act 1986 does not fall under the category of an “officer” of a company under the Trade Union and Labour Relations (Consolidation) Act 1992.

The appellant, one of three joint administrators designated under the Insolvency Act 1986, appealed against the Divisional Court’s determination that he qualified as an “officer” of the company pursuant to section 194 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRC 1992). The company had failed to inform the secretary of state about their intention to lay off employees, thereby violating section 194(1) of the TULRC 1992. The administrator was accused based on the assertion that he was an “other similar officer” of the company, and the failure to notify had occurred with his consent, connivance, or as a result of his negligence. He contended that he could not be held liable for the offense because an administrator did not fit the description of an “other similar officer.”

The TULRC 1992 did not furnish a clear definition of an officer, and none of the provisions in the IA 1986 regarding a company’s officers suggested that an administrator held such a status. In fact, sections 45(2), 212, and 251 of the IA 1986 explicitly indicated that administrators were not considered officers.

The Divisional Court had previously cited cases like Home Treat Ltd, Re [1991] BCC 165 and Powertrain Ltd, Re [2015] EWHC 3998 (Ch), where it had been established that an administrator and a liquidator were deemed “officers” for the purposes of the Companies Act 1985 and 2006. However, these cases did not take into account the clear differentiation made in the IA 1986 between administrators/liquidators and a company’s officers, and they were erroneous in their conclusions.

In the case of Schofield v. Smith [2022] EWCA Civ 824, the Court of Appeal correctly determined that joint administrators were “affiliates” of a company according to the definition in a settlement agreement, which considered “affiliates” as the company’s officers and agents. This decision was sound because the administrators acted as agents of the company, not as officers.

By following established principles of statutory interpretation, it was not justifiable to expand the meaning of the phrase “other similar officer” to include administrators. If the legislative intent had been to apply a functional test, section 194 would have been drafted in a manner that encompassed a receiver and manager.

This ruling has broad applicability to all statutory offenses related to the commission of an offense by “officers or other similar officers” of a company.