Factual and Procedural Background
The Appellant was one of three joint administrators appointed on 13 January 2015 to manage Company A, a retail company within Company B group. Immediately after appointment the administrators executed a “pre-pack” sale of most of the business. Redundancies were effected at a warehouse in The City on 14 January 2015 and statutory notice of the redundancies was not sent to the Secretary of State (the second Respondent) until 4 February 2015.
In July 2015 the second Respondent commenced criminal proceedings in Entity A under section 194(3) of the Trade Union and Labour Relations (Consolidation) Act 1992 (“TULRCA”) against both the sole director of Company A and the Appellant, alleging failure to notify proposed collective redundancies. District Judge [Davison] ruled in May 2018 that an administrator is an “officer” of the company for the purposes of section 194(3). Following judicial review, the Divisional Court upheld that ruling in November 2021. The Supreme Court heard the Appellant’s appeal and delivered judgment on 1 November 2023.
Legal Issues Presented
- Whether an administrator appointed under the Insolvency Act 1986 (“IA 1986”) is an “officer” of the company within the phrase “any director, manager, secretary or other similar officer of the body corporate” in section 194(3) TULRCA.
Arguments of the Parties
Appellant's Arguments
- The IA 1986 contains numerous provisions distinguishing administrators from “officers”; Parliament could have, but did not, include administrators in the statutory definition of officer (section 251 IA 1986).
- Historical authority (In re B Johnson & Co (Builders) Ltd) establishes that exercising managerial control is insufficient to make a person an officer.
- A functional interpretation would create practical difficulties: administrators often need to act swiftly and may be forced into a dilemma between statutory notice obligations and their duty to rescue or realise the business.
Respondent's Arguments
- Section 194(3) should be given a broad, functional construction so that anyone with day-to-day control, including administrators, can be personally liable; otherwise there would be a “vacuum” in enforcement where collective redundancies are likely.
- First-instance authorities (In re Home Treat Ltd; In re Powertrain Ltd) and later Court of Appeal authority (Schofield v Smith) treat insolvency office-holders as company officers.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| In re B Johnson & Co (Builders) Ltd [1955] Ch 634 |
A receiver and manager appointed under a debenture is not an officer of the company. |
Used as historical authority showing that managerial control alone does not confer officer status, supporting the Appellant’s position. |
| In re Home Treat Ltd [1991] BCC 165 |
First-instance decision holding administrators are officers for relief under s.727 Companies Act 1985. |
Criticised; Supreme Court found the reasoning unsound and declined to follow it. |
| In re Powertrain Ltd [2015] EWHC 3998 (Ch) |
Followed Home Treat in treating liquidators as officers. |
Also disapproved for failing to address statutory distinctions. |
| In re X Co Ltd [1907] 2 Ch 92 |
Suggested a liquidator “might” be an officer. |
Treated as slender, outdated authority providing little support for Respondent’s case. |
| Schofield v Smith [2022] EWCA Civ 824 |
Administrators fell within a contractual definition of “employees/officers”. |
Considered; Court held it was correct on agency grounds but incorrect insofar as it treated administrators as statutory officers. |
| Powdrill v Watson [1995] 2 AC 394 |
Administrators who continue contracts of employment for more than 14 days adopt those contracts. |
Cited to illustrate the practical dilemma administrators face when redundancies are imminent. |
| Clarks of Hove Ltd v Bakers' Union [1978] 1 WLR 1207 |
Insolvency alone is not a “special circumstance” excusing notice requirements. |
Referenced to show that companies in administration remain bound by sections 193–194 TULRCA. |
| In re Hartlebury Printers Ltd [1992] BCC 428 |
Appointment of an administrator does not automatically render statutory notice impracticable. |
Used to counter the Respondent’s policy argument. |
| Armour v Skeen 1977 SLT 71 |
A local-authority director of roads was an officer for health-and-safety legislation. |
Illustrates that “officer” has a constitutional, not purely functional, meaning. |
Court's Reasoning and Analysis
Statutory context. The Court conducted a detailed examination of the Insolvency Act 1986, which created the office of administrator. Numerous provisions distinguish between “administrators” and “officers”, and section 251 IA 1986 defines officer to “include a director, manager or secretary” without mentioning administrators. Other IA 1986 sections (e.g., 212, 45, 64) list administrators separately from officers, confirming Parliament’s intention to treat the roles differently.
Historical interpretation. Established case law has long held that even a receiver and manager—who exercises complete managerial control—does not become an officer. The same reasoning applies to administrators.
Critique of prior authorities. First-instance decisions (Home Treat, Powertrain) and dicta in X Co and Schofield v Smith were found unpersuasive because they ignored the statutory scheme and conflated holding an “office” with being an “officer of the company”.
Rejection of the functional test. The Divisional Court’s view that “other similar officer” should cover anyone in senior managerial control was rejected. If Parliament had intended a functional test it could have used familiar language such as “any person concerned in the management.” The presence of section 194(4), which extends liability to members who manage corporate affairs, further undermines a functional reading of section 194(3).
Constitutional test adopted. The Court held that “officer” in section 194(3) carries its conventional constitutional meaning—someone who occupies an office within the company’s formal governance structure (e.g., director, manager, secretary). Administrators are officers of the court, not of the company.
Policy considerations. Competing policy arguments from both sides could not override the clear statutory language. Any enforcement “vacuum” is a matter for Parliament, not judicial re-drafting.
Holding and Implications
HOLDING: The appeal is ALLOWED. The decision of District Judge [Davison] that the Appellant, as administrator, was an “officer” of Company A for the purposes of section 194(3) TULRCA is quashed.
Implications: Administrators are not personally liable under section 194(3) for failure to notify collective redundancies; criminal liability remains solely with the company unless Parliament amends the statute. The ruling disapproves earlier first-instance authorities and clarifies the constitutional, rather than functional, approach to the term “officer” across comparable statutory provisions.