Administrative law and corporate liquidation regulation
Administrative Law: Overview
Administrative law governs the activities of administrative agencies of government. It includes rulemaking, adjudication, or enforcement of a regulatory agenda. It ensures government agencies act lawfully and fairly.
Key Principles:
Delegated Legislation: Power granted to agencies to make rules.
Judicial Review: Courts oversee administrative actions.
Procedural Fairness: Due process for affected parties.
Reasonableness and Proportionality: Decisions must be reasonable.
Case Laws in Administrative Law
1. Associated Provincial Picture Houses Ltd. v. Wednesbury Corporation (1948)
Facts: The Wednesbury Corporation refused a cinema license on grounds it was not suitable for children on Sundays.
Issue: Was the corporation’s decision unreasonable?
Held: The court held that a decision is only unlawful if it is so unreasonable that no reasonable authority would ever consider it (the “Wednesbury unreasonableness” standard).
Significance: Established the standard for judicial review of administrative decisions—only decisions that are irrational or absurd can be overturned.
2. Council of Civil Service Unions v Minister for the Civil Service (1985) (GCHQ case)
Facts: The government banned civil service workers from joining trade unions at GCHQ without consultation.
Issue: Can prerogative powers be subjected to judicial review?
Held: Yes. Even decisions based on prerogative powers are subject to judicial review for procedural fairness.
Significance: Confirmed that administrative decisions are reviewable, including those from executive prerogative powers, and stressed the importance of fairness.
3. R v. Secretary of State for the Home Department, ex parte Doody (1994)
Facts: Prisoners challenged the Home Secretary’s decision to not inform them of reasons for sentence tariffs.
Issue: Does the principle of natural justice require reasons to be given for administrative decisions?
Held: Yes. It is a fundamental principle that affected parties have a right to know reasons behind decisions that affect them.
Significance: Expanded the procedural fairness principle to require reasons be provided in administrative decisions.
4. Padfield v Minister of Agriculture (1968)
Facts: The Minister refused to refer a complaint against a milk marketing board despite statutory provisions.
Issue: Can the Minister refuse to exercise statutory discretion to frustrate the purpose of the legislation?
Held: No. The Minister must use discretion to fulfill the statute’s purpose and cannot frustrate it.
Significance: Established that administrative discretion must be exercised in line with legislative intent.
5. R v. Birmingham City Council, ex parte Equal Opportunities Commission (1989)
Facts: Birmingham Council’s policy favored men in employment decisions.
Issue: Did the policy breach statutory equality provisions?
Held: The policy was unlawful as it violated equality law.
Significance: Reinforced that administrative decisions must comply with broader legal principles such as equality and anti-discrimination.
Corporate Liquidation Regulation: Overview
Corporate liquidation is the process of winding up a company’s affairs, selling assets to pay creditors, and distributing any surplus to shareholders. Liquidation can be voluntary or compulsory.
Key Principles:
Priority of Claims: Secured creditors, preferential creditors, unsecured creditors.
Insolvency Tests: Unable to pay debts or liabilities exceed assets.
Liquidator’s Role: Manage the process impartially, avoid conflicts of interest.
Fraudulent Trading: Directors can be held liable for wrongful trading.
Case Laws in Corporate Liquidation Regulation
1. Re Paramount Airways Ltd (1993)
Facts: Paramount Airways went into liquidation. The court examined whether certain payments were preferential.
Issue: What constitutes a preferential payment?
Held: Payments made shortly before liquidation that favor one creditor over others are voidable.
Significance: Clarified what payments can be set aside in liquidation to ensure fairness to all creditors.
2. Re A Company (No 005089 of 1987) (1988)
Facts: Directors continued to trade despite the company being insolvent.
Issue: Can directors be held liable for wrongful trading?
Held: Yes. Directors have a duty to stop trading when insolvency is inevitable to minimize losses.
Significance: Reinforced the liability of directors in wrongful trading during liquidation.
3. Re MC Bacon Ltd (No 1) (1990)
Facts: The liquidator challenged transactions made before liquidation.
Issue: Whether certain transactions were transactions at an undervalue or preferences.
Held: Transactions made shortly before liquidation for less than market value can be reversed.
Significance: Strengthened protections for creditors against undervalued transactions.
4. Re Barings plc (No 5) (1999)
Facts: Barings Bank collapsed due to rogue trading.
Issue: Director’s responsibilities and negligence in insolvency.
Held: Directors breached their duties by failing to prevent the company’s collapse.
Significance: Highlighted director accountability in corporate insolvency and liquidation.
5. Re Atlantic Computer Systems plc (1992)
Facts: A company leased equipment shortly before liquidation.
Issue: Whether the leasing company could reclaim leased assets.
Held: The lease was a genuine lease, and the lessor was entitled to repossess assets.
Significance: Clarified rights of leasing companies during liquidation and the distinction between leases and hire-purchase agreements.
Summary
Administrative law focuses on the legality and fairness of government agency actions, with judicial review as a critical safeguard. Cases like Wednesbury and GCHQ set foundational principles.
Corporate liquidation regulation ensures orderly winding up of insolvent companies, protecting creditors and holding directors accountable for wrongful conduct. Cases such as Paramount Airways and Barings demonstrate these principles.
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