Tucker & Anor v Gold Fields Mining LLC

This dispute is about the legal effect of a paragraph in a creditors’ voluntary arrangement (CVA) under Part 1 of the Insolvency Act 1986. Paragraph 23.5 set the time limits within which the claim form of a creditor must be lodged with the joint supervisors of the CVA. Provisions barring late claim forms are common in CVAs, though not necessarily worded as in this paragraph. They serve the interests of certainty and finality.

The construction of the paragraph affects the circumstances in which the supervisors or the court can accept claim forms lodged after the primary deadline for lodging claim forms. The primary deadline in this CVA is called “the Claims Date.” The acceptance of claim forms after that date depends in some cases on whether the failure to lodge the claim form by the Claims Date did not result from wilful default or lack of reasonable diligence on the part of the CVA creditor.

The appellants, who are partners in KPMG LLP, are the joint supervisors of the CVA in respect of Energy Holdings (No 3) Limited (EH3). I will refer to the appellants as “the Supervisors.” EH3 was a member of a large group of companies operating in the energy sector. The ultimate parent was a Texas corporation, TXU Corporation. In November 2002 a number of companies in the group were placed in administration. The TXU Europe group had liabilities to external creditors totalling about £4.4bn. In December 2002 EH3 was placed in creditors’ voluntary liquidation.

The respondent, Gold Fields Mining Limited (GFM), is the creditor whose $230m claim form dated 21 June 2007 was rejected. The Supervisors determined that they had no power to accept GFM’s claim based on an assignment from its holding company, Peabody Energy Corporation (Peabody), on 19 June 2007. Peabody, which was an international coal company, claimed to be the beneficiary of an indemnity given by EH3 as part of a transaction in May 1998. It is claimed that the indemnity covers liability for remediation costs and other environmental liabilities paid or payable as a result of mining operations conducted in the USA from the 1980s until the mid-1990s. It is common ground that GFM stands in the same position under the CVA as Peabody did.

The Supervisors’ decision was notified in their solicitors’ letter of 16 October 2007 stating that the claim

“ …was submitted outside the time limits prescribed by the CVA and therefore the Claim is statute barred . For this reason the joint administrators have not, and will not, adjudicate the Claim and it will not rank for Distributions under the CVA.”

GFM challenged the decision in proceedings issued in the Companies Court on 5 November 2007 and heard by the Chancellor. He made an order on 10 July 2008 reversing the appellants’ decision. He declared that the time for lodging the claim in the CVA had not expired and ordered the Supervisors to proceed to adjudicate the claim accordingly.

The Chancellor’s order was based on his two ex tempore judgments given on two successive days. The first judgment was on the 9 July 2008, the second on 10 July 2008. The first judgment was on construction, that being the second issue raised by the originating application. The Chancellor held that, although the claim form was lodged after the primary “Claims Date” specified in the CVA, it was not in fact barred unless and until somebody had determined whether the late submission was due to “wilful default or lack of reasonable diligence” on the part of GFM. The Supervisors were wrong to have excluded GFM’s claim from consideration on the ground that it was out of time.

In his second judgment the Chancellor addressed the first issue in the application, holding that GFM’s failure to lodge the claim form in time did not result from a wilful default or lack of reasonable diligence on its part.

The Chancellor refused permission to appeal. Limited permission to appeal was granted by Sir John Chadwick. This appeal is confined to the second issue. It is concerned only with the meaning and effect of paragraph 23.5 of the CVA.

By a respondent’s notice GFM seeks to argue that the Supervisors’ construction of that paragraph would not be compatible with Article 1 of the First Protocol to the ECHR. This point was not raised before the Chancellor. It will not be necessary for this court to consider the ECHR point, if it concludes that the Chancellor correctly construed paragraph 23.5.

If EH3 had remained in creditors’ voluntary liquidation, no time limits under the insolvency legislation would have been applicable to bar GFM’s claim. Following the realisation of the TXU Europe groups’ assets, there were lengthy negotiations and compromises between a number of creditor groups and two separate series of interlocking CVAs of 44 companies in the group were proposed to creditors.

On 11 March 2005 proposals for a CVA for EH3 were issued. Section 1 of the CVA consisted of the proposals, which were qualified by reference to the terms of the CVA, as set out in Section 2. The document stated that, if there was any conflict between Section 1 and Section 2, the terms of the latter should prevail.

Section 1 included a provision in Part G on management of the CVAs and a CVA Creditor’s entitlement to a distribution in respect of his CVA Claim-

“Claims Date

4.2

The Claims Date in respect of each CVA is the date falling 45 days after the CVAs have been approved at the Creditors’ Meetings and the Members’ Meetings.

4.3

In order for a CVA Creditor who has lodged a Claim Form after the Claims Date to be entitled to Distributions, the relevant CVA Supervisors or the Court must determine that the failure to lodge the Claim Form earlier did not result from a wilful default or lack of reasonable diligence on the part of the CVA Creditor. Alternatively the CVA Creditor must demonstrate to the CVA Supervisor or to the Court that:

(a)

the CVA Creditor did not have notice of the Creditors’ Meeting of the relevant CVA Company; and

(b)

within 28 days of becoming aware that the Creditors’ Meeting of the relevant CVA Company had taken place the CVA Creditor lodges its Claim Form with the CVA Supervisor.”

I note that the first sentence of paragraph 4.3 is of general application to CVA creditors who lodge a claim form after the “Claims Date.” No express distinction is drawn between creditors who had notice of the creditors’ meeting and those who had no notice. The paragraph goes on to deal specifically with the case of a creditor who had no notice of the creditors’ meeting and is given 28 days from becoming aware that the creditors’ meeting had taken place to lodge a claim form.

The Supervisors’ case on construction is that (1) “earlier”, as used in paragraph 4.3 (and also in paragraph 23.5, to which I shall come) means “earlier than the Claims Date” rather than “earlier than the date on which the Claim Form is lodged,” and (2) that “alternatively” indicates a scheme under which the first exception to the Claims Date applies only to creditors who had notice of the creditors’ meeting. The overall effect, it is submitted, is that there are two mutually exclusive categories of creditors: those with notice of the creditors’ meeting and those who had no notice. Only the former, it is submitted, can invoke the Supervisors’ power to determine that the failure to lodge the claim form “earlier” was not the result of “wilful default or lack of reasonable diligence.”

Section 2 of the proposal document contains the terms of the CVAs, which were approved at the creditors’ meeting on 31 March 2005. Paragraph 23.5 in Part IV on the adjudication of CVA claims replicates paragraph 4.3 of the proposal, with some minor drafting modifications, by providing that:

“Claim Forms must be lodged with the CVA Supervisors of the relevant CVA Company on or before the Claims Date. If a Claim Form is lodged after the Claims Date, a CVA Claim will not rank for Distributions unless the CVA Supervisors of the relevant CVA Company or the Court determines either that the failure to lodge the Claim Form earlier did not result from a wilful default or lack of reasonable diligence on the part of the CVA Creditor, or that the CVA Creditor:

(a)

did not have notice of the Creditors’ Meeting of the relevant CVA Company; and

(b)

within 28 days of becoming aware that the Creditors’ Meeting of the relevant CVA Company had taken place it lodged its Claim Form with the CVA Supervisors.”

The “Claims Date” is defined in Part 1 of Annex 1 of the CVA as meaning, in respect of a CVA Company

“ the date falling 45 days after the CVA for that CVA Company is approved at the meetings convened for that purpose.”

The CVA’s primary deadline “Claims Date” was fixed at 16 May 2005.

The CVA approved by the requisite majorities at the creditors’ meeting on 31 March 2005 operated as a statutory contract binding the company and even those creditors who would have been entitled to vote, if they had had notice of the meeting: s 5 Insolvency Act 1986, as amended by the Insolvency Act 2000. Creditors dissatisfied with the terms of the CVA imposed on them by its approval have the right to apply to the court to have the approval revoked or suspended on specified grounds, such as unfair prejudice or material irregularity: s 6 of the 1986 Act. The time limit for making an application is 28 days from the date on which the chairman’s report of the meeting of creditors was made to the court or, in the case of a creditor who was not given notice of the creditors’ meeting, 28 days beginning with the day on which the creditor became aware that the meeting had taken place.

The period of 28 days is thus the same for both the challenge to the CVA itself and for the lodging of a claim form under the CVA by a creditor without notice of the meeting. In the case of a challenge to the CVA the court has no power to extend the 28 day period: Bournemouth & Boscombe Athletic Football Club [1998] BPIR 183. It is not, however, suggested that it necessarily follows that claim forms lodged after 28 days cannot be accepted if the CVA, on its true construction, provides for late acceptance by the Supervisors.

GFM was not given notice of the creditors’ meetings. It did not lodge its claim form by the Claims Date. Indeed, GFM’s claim form was not received by the appellants until 16 July 2007. Although Peabody had become aware in general terms of the creditors’ meeting and approval of the CVA at about the end of January 2007, it did not lodge it within the period of 28 days allowed by paragraph 23.5 (b) of the CVA. A considerable amount of time was spent on calculating the claim and completing the claim form dated 21 June 2007. The aggregate sum of $230m covers present, future and contingent liabilities.

On 16 October 2007 the Supervisors rejected the GFM claim on the ground that it was out of time. The Claims Date had long passed. The period of 28 days from becoming aware of the creditors’ meeting had also passed. The Supervisors’ position was that they had no power to determine whether the claim had not been lodged on time as a result of wilful default or lack of reasonable diligence. They concluded that that part of paragraph 23.5 only applied to creditors who had notice of the creditors’ meetings. Peabody/GFM did not have such notice.

The Chancellor put the question of construction as follows-

“14.

The question of construction is quite simply whether on the true construction of para 23 of s. 2, Part 4 of the CVA relating to EH3, this claim is excluded if it is not made within twenty-eight days of the creditor becoming aware of the creditors’ meeting approving the CVA as the Supervisors claim, or whether time is extendable thereafter if the Supervisors are satisfied that the default is not due to wilful default or lack of reasonable diligence as the creditor claims.”

Although this question is very short, a great deal turns on it.

In brief, the Supervisors contend that paragraph 23.5 reflects the two mutually exclusive exceptions to the application of the Claims Date found in paragraph 4.3 of the proposal and that there are excluded from the “no wilful default/ no lack of reasonable diligence” provision those creditors without notice of the creditors’ meeting. They come within the second provision in (a) and (b) allowing a period of 28 days from becoming aware of the creditors’ meeting.

According to the Supervisors GFM is out of time. It lodged its claim form after the Claims Date. As it came to know of the creditors’ meeting more than 28 days before the claim form was lodged, it is too late to rely on that exception to the application of the Claims Date. GFM is not entitled to rely on absence of wilful default or the presence of reasonable diligence in relation to the lodging of the claim form as covered by the exception to the Claims Date. The failure to submit the claim form within 28 day period operates as an absolute bar.

In his judgement on the second issue on 9 July 2008 the Chancellor summarised the proceedings, the facts and the competing submissions and concluded that-

“23.

To my mind, the point of construction is clear. Paragraph 23.5 is dealing with late claims. It deals with two different categories, those who received notice of the creditors’ meeting and those who did not, but the two exceptions from the primary rule that claims have to be lodged within 45 days of the proposal are alternatives. That is made absolutely clear by the comparable provisions in Part G, s.4, and I see no reason why 23.5 should be given any different meaning.

24.

The Supervisors’ construction requires, as they recognise, the interpolation into the first alternative of some words requiring the exclusion of those who come within the class of the second. But if that interpolation is made it would give rise to a significant difference between the treatment of one class of creditor and the other. I think there is much force in the submission made by counsel for the CVA creditor, why should those who did have notice of the meeting have a more favourable treatment than those who did not. It seems to me that para 23.5 should be construed in accordance with its terms, no interpolation is appropriate and that the first alternative applies to all creditors who did not submit their claim within the time provided by the definition of the claim date. Thus those who might otherwise have taken advantage of the second alternative are not excluded from the first alternative by the fact that they did not have notice of the meeting.

25.

Accordingly, in my view, the Supervisors were wrong to have excluded from consideration the claim form that was lodged on the ground that it was out of time. It was out of time in relation to the primary date, but it was not out of time unless and until somebody had determined (either the Supervisors or the Court) whether the late submission was due to wilful default or lack of reasonable diligence on the part of the creditors…..”

The essence of the policy argument against the Chancellor’s construction of the CVA is that, in the interests of certainty and finality, those creditors who did not have notice of the creditors’ meeting should be treated differently from those creditors who had notice. The purpose of the provision was to impose the Claims Date deadline, subject only to two specific situations where that deadline had been missed. The Chancellor was wrong to hold that the first exception was capable of applying to the facts of GFM’s case.

The Supervisors assert that there are only two exceptions to the Claims Date and that it is plain from the scheme and language of the paragraph that they are mutually exclusive. The first exception can only logically apply to those creditors who had notice. The second exception is only available to those who did not.

Mr Antony Zacaroli QC appearing for the Supervisors criticised the Chancellor’s judgment for not dealing with their textual point on the significance of “earlier.” It meant “earlier than the Claims Date”, that being the date by which the creditor was required to submit the claim form. Only the failure to do that could be characterised as the result of a default or lack of reasonable diligence. The Chancellor had failed to identify a deadline in respect of which it was possible and relevant to inquire why the creditor had failed to meet it. His first judgment was silent on the point. He seemed to have assumed in his second judgment that “earlier” was a reference to “earlier than the date on which the claim form was lodged.”

Mr Zacaroli emphasised that the logic of the paragraph was that an inquiry into the reason for the failure to lodge the claim form by the Claims Date could only be meaningful where a creditor was aware of the requirement to lodge a claim form by the Claims Date. It could not apply where the creditor had no notice of the creditors’ meeting, since he would not have been aware of the need to comply with a time limit. It would be meaningless to inquire into other reasons for not complying with the Claims Date, such as wilful default or lack of reasonable diligence, where the reason was that the creditor was, through absence of notice of the creditors’ meeting, unaware of the need to lodge a claim form.

It was also argued that, if, as the Chancellor held, the first exception was available to the creditor with no notice, the second exception would be rendered wholly redundant. The mere fact that the creditor was not aware of the Claims Date, as he had no notice of the creditors’ meeting, would inevitably suffice to show that he satisfied the negative case of no wilful default/no lack of reasonable diligence. On the Chancellor’s construction there was no need to have the second exception of the 28 day period from the date of acquiring notice of the creditors’ meeting.

A related criticism of the Chancellor’s judgment was that he wrongly concluded that the Supervisors’ construction was dependent on the interpolation of additional words into paragraph 23.5. On the contrary, it was GFM’s construction that required the insertion of words in order to make sense. The interpolation of the words “than the date upon which it was in fact lodged” would need to be inserted after “earlier”.

The draftsman had drawn paragraph 23.5 to mirror the period of 28 days allowed by section 6 of the 1986 Act for a challenge to the CVA itself. The overriding twin objectives of certainty and finality were more likely to be achieved in that way than by allowing the creditors, who had no notice of the meetings, to make late claims, delaying the distribution and disturbing the size of the distributions to creditors who had participated in the complex negotiations for the CVA proposal.

GFM pressed the general principles governing the construction of documents in support of their submissions on the text and the context of paragraph 23.5. They cited authorities on a range of points: the unusual contractual nature of the CVA, being a document binding on creditors who were unknown, who did not know of the CVA and did not consent to it, making it quite different from a bilateral negotiated contract; the importance of context and purpose in ascertaining the impact of legal language on the reasonable reader of the CVA proposal; and the applicability of the contra proferentem rule.

It is agreed that the CVA must be read as a whole. Although the CVA provides in paragraph 1.1 that, in the case of conflict or inconsistency, the terms of the CVA in paragraph 23.5 of Section 2 prevail over the proposal in paragraph 4.3 of Section 1, that latter paragraph is available as an aid to the construction of paragraph 23.5. Its drafting tends to support GFM’s submission that the “negative investigation” into wilful default or lack of reasonable diligence applies to late claim forms across the board and without differentiating between different classes of creditors.

The text of the disputed provisions must be analysed carefully, but not so closely or narrowly as to neglect either the overall commercial context or the practical consequences. The paragraph does not in terms state that there are to be the two mutually exclusive categories of proving creditors for which the Supervisors contend, nor do the surrounding circumstances steer the provision in that direction.

What are the circumstances surrounding the CVA? The specific context of paragraph 23.5 is the lodging, after the Claims Date, of a claim form for a debt by a creditor seeking to participate in the undistributed assets of an insolvent estate. If EH3 had continued in creditors’ voluntary liquidation, there would have been no specified statutory time limit for submitting a proof of debt. On the other hand, the CVA could set a deadline that would not apply in a liquidation, because it has been agreed by the company and the creditors as an alternative to voluntary liquidation. With the approval of and for the benefit of the general body of creditors, the CVA may provide that distributions may be made by the Supervisors otherwise than in accordance with the rules applicable in a liquidation.

I add to those circumstances the fact that the lodging of a late claim form does not seek to disturb any distributions which have taken place and the fact that no specific prejudice is alleged by the Supervisors in the acceptance of late claim forms.

I turn next to the process of comparing the differing practical consequences of the competing arguments. It is instructive. This is a professionally drafted, pragmatic, commercial document. It is reasonable to assume that, unless the contrary appears from the clarity of the text or the force of surrounding circumstances, the CVA was meant to produce outcomes that make good sense. The limits of generalised language can be more usefully tested by “the solidity of specification” than by abstract debate. Particular concrete instances put in argument illustrated how paragraph 23.5 was probably meant to work in practice. The results are compelling in favour of upholding the Chancellor’s construction.

Take the case of the creditor of EH3 who did not have notice of the creditors’ meeting on 31 March 2005, but became aware of it on, say, 5 April 2005. If, as the Supervisors insist, the paragraph really did lay down two mutually exclusive alternative schemes for lodging claim forms - one for the creditors with notice, the other for the creditors without notice - the creditor without notice would have 28 days from 5 April to lodge his claim form. If he failed to lodge it within that period, he would then be out of time, even if he had lodged it before the Claims Date. The Supervisors could not determine to accept his claim form, even if the lateness was not the result of wilful default or lack of reasonable diligence on the part of the creditor.

However, I understood Mr Zacaroli to accept in his oral submissions that, even if such a creditor lodged his claim more than 28 days after 5 April provided itwas lodgedbefore the Claims Date, that could be accepted by the Supervisors. He explained that the reason for this was that the Claims Date was a deadline which applied to all creditors. The acceptance of a claim form lodged before the Claims Date would not, he said, be the consequence of a specific inquiry as to whether the lateness of the lodging of the claim form was the result of wilful default or lack of reasonable diligence on the part of the creditor without notice. Even so, this instance shows that, on the Supervisors’ own construction, the bar on claim forms lodged by creditors without notice after the expiration of the 28 day period from becoming aware of the creditors’ meeting is not absolute. There are circumstances in which the absolute bar does not apply.

Next, take the creditor without notice of the creditors’ meeting who lodges his claim form after the Claims Date and on the same day as a creditor with notice of the meeting. According to the Supervisors, very different consequences would follow. If the Supervisors determine that the creditor without notice has lodged his claim within the period of 28 days of becoming aware that the creditors’ meeting has taken place, that claim is not excluded from distributions. Indeed, there would be no need for the further inquiry that would have to take place in the case of a creditor with notice, who lodged his claim form on the same date. In his case the Supervisors would have to determine, before accepting the claim form, that the lateness was the result of wilful default or lack of reasonable diligence.

If, however, the creditor without notice has lodged his claim form afterboth the Claims Date and the period of 28 days from becoming aware of the creditors’ meeting, he is, according to the Supervisors, absolutely excluded from distribution. This is so, even though the failure to lodge the claim form within the 28 days was not the result of wilful default or lack of reasonable diligence on his part.

The creditor without notice is not, according to the Supervisors, entitled to the benefit of those provisions of paragraph 23.5. They insist that they can only make the determination in such a case in favour of a CVA creditor who had notice of the creditors’ meeting. It is not obvious to me how the interests of certainty or finality underlying the time limits for lodging claim forms can sensibly be served by such different treatment of claim forms lodged with the Supervisors on the same day. The good sense in the disparity of outcomes is elusive.

A further instance of the way in which the Supervisors say the paragraph would work was suggested by the facts in the Australian case of Ray Brooks PTY Ltd v. New South Wales Grains Board [2002] 43 ACSR 657,which was cited by Mr Stephen Davies QC in his submissions for GFM. The case concerned a second claim form lodged after the lodgement date. A creditor with notice of the meeting may lodge a claim form before the Claims Date. What if a second claim comes to light after that Claims Date has passed? The Supervisors may accept the second claim from a creditor with notice of the creditors’ meeting, if the lateness was not the result of wilful default of lack of reasonable diligence. However, according to the Supervisors’ construction, they have no power to accept such a late claim form from a creditor who had no notice, even if he had lodged a first claim form before the Claims Date and he lodged a second claim form after the Claims Date on the same date as the creditor with notice. There is an absolute bar on the submission of claim forms after the Claims Date if the period of 28 days has expired from that creditor becoming aware of the creditors’ meeting.

In my judgment, this striking and surprising disparity in the treatment of CVA creditors with notice of the creditors’ meeting and CVA creditors with no notice of the creditors’ meeting is not required by the general objective of the CVA, nor by the scheme, structure and the language of paragraph 23.5 itself. The imposition of a harsher regime on those who were unaware of the creditors’ meeting approving the CVA is difficult to understand or justify by reference to any purpose that has been advanced for drawing the mutually exclusive distinction on which the Supervisors’ case is based.

I agree that deadlines for lodging claim forms, such as the 45 day period after creditors’ meeting, are in the interests of certainty and finality, even though those time limits did not apply in the creditors voluntary liquidation preceding the CVA. However, the provisions of the CVA make exceptions. The dispute is about the scope of the exceptions. The failure to lodge the claim form before the Claims Date is not an absolute bar to ranking for distributions. The CVA creditor with no notice of the creditors’ meeting may, as here, only become aware of the creditors’ meeting nearly two years later and yet is allowed to rank in the distribution, if a claim form is lodged within 28 days of becoming aware of the creditors’ meeting. No further explanations can be required by the Supervisors.

Further, if, as the Supervisors contend, the scheme is of two mutually exclusive alternatives – the “negative determination” of no wilful default or lack of reasonable diligence in the case of creditors with notice of the meeting and the 28 day period of grace for those who had no notice - it is difficult to make sense of the consequences of that construction. I am also unable to agree with the Supervisors that the language of paragraph 23.5 supports their construction. They say that the reference to “earlier” only makes sense as a reference to earlier than the Claims Date, which would confine the negative determination provision to CVA creditors with notice of the meeting. In my judgment, the natural and ordinary meaning of the words is that “earlier” is a reference to earlier than the date on which the claim form was actually lodged. In that case the determination of no wilful default would be available to creditors with or without notice of the meeting whose failure to lodge the claim form at an earlier date than it was lodged was explained by reasons not involving wilful default or lack of reasonable diligence.

In sum, the Supervisors’ suggested construction of paragraph 23.5 as imposing an absolute bar on claim forms lodged by a creditor without notice more than 28 days after becoming aware of the creditors’ meeting is (a) conceded not to be absolute in practice and (b) makes less than absolute sense. Like the Chancellor I prefer GFM’s construction: it fits more comfortably into the scheme, structure and language of the paragraph and it makes good sense.

For the above reasons I would dismiss the appeal.

I have had the advantage of reading Mummery LJ’s judgment in draft and respectfully agree with it. I add some brief words of my own although they are little more than a footnote to what Mummery LJ has said.

I recognise the semantic basis on which the supervisors seek to make good their case and when I first read paragraph 23.5 I too was initially disposed to interpret it in the way they favour. The oral submissions persuaded me, however, that the most that can be said for their argument is that there is perhaps an element of ambiguity about the paragraph and that any such ambiguity ought to be resolved in favour of the interpretation advanced by GFM.

More particularly, the supervisors’ case that creditors who did not have notice of the creditors’ meeting are dealt with exclusively by the latter part of paragraph 23.5 cannot survive their acceptance that a creditor who only became aware of the meeting after it had happened, but more than 28 days before the claims date, would also have until the claims date to submit his claim form. It follows that the first part of paragraph 23.5 is not focusing only on creditors who had notice of the creditors’ meeting. I did not understand the supervisors’ acceptance in that respect to go the further distance of accepting that such a “no notice” creditor would be entitled to the benefit of the no “wilful default or lack of reasonable diligence” provision if, in the event, he still did not get his claim form in by the claims date. But it would be odd if he was not. A construction of paragraph 23.5 to that effect would show it to be unfairly discriminatory. I would be reluctant to interpret it as intending to perpetrate such unfairness. Mummery LJ has explained other examples where there could be similar unfairness. If there is any ambiguity in paragraph 23.5, I consider that it must be resolved by an interpretation that avoids the potential for unfairness and irrationality that is inherent in the supervisors’ argument.

In arriving at that conclusion I regard the provisions of paragraphs 4.2 and 4.3 as helpful. Mummery LJ has set them out and I will not repeat them. Their purpose was to explain to those creditors who would be voting at the meeting the time limits for lodging claim forms. Paragraph 4.2 explained that the claims date would be 45 days after the CVA had been approved at the creditors’ and members’ meetings. Paragraph 4.3 explained the circumstances in which claim forms submitted after the claims date would be admitted. It was plainly intending to describe the provisions of paragraph 23.5, although it did so in slightly different language. The overall structure of paragraph 4.3 was, however, essentially the same as that of paragraph 23.5. If the issue raised by the present appeal had turned exclusively on the interpretation of paragraph 4.3, I would have regarded the supervisors’ argument as a very difficult one to advance.

The first sentence of paragraph 4.3 deals generally with late submissions and indicates that a creditor who lodges his claim form after the claims date will still be entitled to have it admitted if either the court or the supervisors “determine that the failure to lodge the Claim Form earlier did not result from a wilful default or lack of reasonable diligence on the part of the CVA Creditor.” There is in my view no reason to interpret that as doing other than to refer both to creditors who did and to those who did not have notice of the creditors’ meeting. I regard the natural sense of “earlier” in that passage as meaning “earlier than the date on which the Claim Form was lodged” rather than “earlier than the Claims Date” (there was anyway no obligation to lodge the claim form earlier than that date).

The second sentence of paragraph 4.3 then opens with the words “Alternatively the CVA creditor ...”. That sentence is directed exclusively to creditors who did not have notice of the meeting. Any such creditor will or may only have learnt of the claims date after it has passed and its scheme is that, provided he submits his claim form within 28 days of becoming aware of the creditors’ meeting, he will be in time. But the sentence is not providing that, once the 28-day period has expired, he will be absolutely barred from lodging a claim. It is introduced by the words “Alternatively the CVA creditor …” in a context in which (a) “the CVA creditor” mirrors the identical words at the end of the first sentence, and (b) “Alternatively” means alternatively to the provisions of that sentence. The sense of paragraph 4.3 read as a whole is, therefore, that the provisions of each sentence are in principle available to be relied upon by a “no notice” creditor. If he can bring himself within the provisions of the second sentence, his claim form will be admitted. If he cannot, he is still entitled to rely on the first sentence and to argue that, even though he missed the 28-day limit, he did not do so from “wilful default or lack of reasonable diligence” and it will then be for the supervisors or the court to decide the matter. The Chancellor pointed out in paragraph 23 of his judgment that paragraph 4.3 makes it absolutely clear that, as regards the “no notice” creditors, the two sentences are alternatives, and I respectfully agree.

That being so it would be surprising if the slight difference in language of paragraph 23.5 produced a substantial difference in commercial result. Mr Zacaroli did not suggest that there was any conflict between the two paragraphs although, if there were, the terms of the proposal provide for paragraph 23.5 to prevail. In my view there is no conflict. There is no difference of meaning between paragraphs 4.3 and 23.5. I consider that the latter part of paragraph 23.5, starting with “or that the CVA Creditor …”, similarly provides to the “no notice” creditor an alternative to the provisions of the former part.

For the reasons given by Mummery LJ and these further reasons, I too would dismiss the appeal.

I agree that the appeal should be dismissed for the reasons given by Mummery LJ and Rimer LJ.