Awkward IP

Awkward IP

Didn't find your answer?

Client goes in to compulsory liquidation following the loss of a court case. The OR has farmed it it to a very difficult IP. I’ve sent them everything I had (we did the bookkeeping on an excel “cashbook”) and said we kept nothing else, ask the client but they insist that:

a)      We must have more than this (we don’t)

b)      They want our engagement letter (why?)

c)       That we have a contract with the client (we don’t, we had an offer and an acceptance, but we never raised an invoice and we have never been paid anything)

d)      Download of all our emails with the client (Why? – Besides, we’re old fashioned, we print them off hard copy and file them in files which makes them a correspondence file and therefore, ours)

Does the IP have the right to our engagement letter, to make us do anything else or our emails? I’ve never heard of this before (even when I was a trainee IP) and it’s a shed load of work for us if he can?

Replies (18)

Please login or register to join the discussion.

By johngroganjga
26th Aug 2014 20:02

The IP stands in the shoes of the client, so anything you would have to give the client if he asked for it you will have to give the IP. But I can't see that that includes letters and Emails between you and the client because obviously the client (i.e. the IP) already has them.

But I wouldn't want to appear unnecessarily awkward. Why not just say that you do not consider a request for copies of your entire correspondence files to be reasonable, but if they would care to frame their request more specifically you will do your best to assist?

Thanks (3)
avatar
By Steve McQueen
26th Aug 2014 20:31

Thank you for the guidance - nicely worded reply.

Steve

Thanks (0)
avatar
By neileg
27th Aug 2014 09:29

Payment

Don't pussyfoot around. If you haven't been paid let them go whistle.

Thanks (1)
avatar
By Steve McQueen
27th Aug 2014 17:34

So the continuing saga...

So I’m still battling with this “gentleman”.

Having said to this IP that I do not consider a request for copies of my entire correspondence files to be reasonable, but if he would care to frame his request more specifically I would do my best to assist, he’s come back with a 3 pager (which I copy below)

The problem I have (and it’s a character flaw) is that his particular form of aggression doesn’t make me comply - it never has – it makes me do the opposite and for two pins I’m happy to say “f-you, let go to Court son”

Other than having too much time on his hands, what is this guy trying to prove?

 

Reply from liquidator

"With respect, actions speak louder than words. You do not need to state you are not engaged in a refusal because the action of not complying with the reasonable request for the same and failure to confirm matters specifically requested on a number of occasions evidences the non cooperation and refusal. The refusal can be overridden by subsequent actions but until that transpires your statement: “At no time have I refused to send you emails.” is flawed.

 

I note that you broadcast an apparent lack of understanding as to my request for the correspondence files. As one accountant to another I would have thought the same to be a matter which is readily apparent. However, in light of your request I will let you have chapter and verse.

 

I have no records from the LLP per se. 

 

I enter office as a relative stranger and it is axiomatic that I do not know the content of the correspondence file that you are withholding as I have seen the same and therefore to request specificity is with respect to you absurd.

 

You may find it instructive to consider the following:

1.       In Gomba Holdings UK Ltd v. Minories Finance Ltd [1988] 1 WLR 1231 at 1233C it was held as between principal and agent all documents prepared or received by agent belong to the principal.

2.       It is trite law that which was set out in the following statement in the judgement in the Court of Appeal in the matter of Fairstar Heavy Transport N.V. v Adkins and others [2013] EWCA Civ 886:

“…it is a legal incident of that relationship that a principal is entitled to require production by the agent of documents relating to the affairs of the principal.”

3.       I trust that you will appreciate that you have a legal duty to deliver up to me property of the Company. I would refer you to Walker Morris v Khalastchi [2001] 1 BCLC in which the following statement was made in the Judgment that was handed down in relation to documents to which a liquidator claimed:

“…The starting point is that the files are the property of the Company, and the liquidator is entitled to possession of them. The applicants have no right whatsoever to withhold them.”

 

Documentation not owned by the LLP

 

Ownership is only one basis of entitlement of a Liquidator to documents. The other is legal entitlement resulting from inter alia Section 235(3)(c) of the Insolvency Act 1986. Therefore even if you were correct as to matters of ownership you have a duty to cooperate with me pursuant to Section 235 of the Insolvency Act 1986. I would additionally refer you to Section 235(5) of the Insolvency Act 1986 which states as follows:

 

If a person without reasonable excuse fails to comply with any obligation imposed by this section, he is liable to a fine and, for continued contravention, to a daily default fine.

 

The liquidator is entitled to see all that the former Members were entitled to see. All that your firm was entitled to see related to exclusively to the LLP’s historical financial dealings afforded to you by the former Member’s of the LLP. It would therefore be abstruse for the same to be denied to me.

 

Therefore it is in fact my position that there are no documents on your files that you can withhold from me save for those which are restricted by statute such as for example only, reports to your money laundering officer reporting office for example only.

 

It is axiomatic that a liquidator enters office as a relative stranger and cannot reconstitute knowledge of a company without access to all of the information involving the LLP to which it is entitled. When a liquidator is therefore seemingly blinded by that lack of information, restricting the liquidator’s ability to access information that was available to the former Members, this is clearly of no assistance and appears obstructive.

 

However, if the test of ownership were to fail for any documents or electronic files held, then I rely upon the statutory provisions in Sections 235 and 236 of the Insolvency Act 1986 affording me the entitlement to call for the same in any event. I therefore hope you will find in such regards the following extracts from the case law germane and instructive. In British and Commonwealth Holdings plc (joint administrators) v Spicer & Oppenheim (a firm) (1992) 4 All ER 876 (“B&C”)  the following statements were incorporated in the judgment handed down:

 

“It was in the interests of the creditors of the company and in the public interest that the administrators should be able to conduct their investigations as thoroughly as possible…”

 

“A reason for conferring the power is that the office-holder "usually takes office as a stranger to the relevant events:" see per Slade J. in In re Castle New Homes Ltd. [1979] 1 W.L.R. 1075, 1080D.”

 

“In this connection I also find assistance from a passage from the judgment of Buckley J. in In re Rolls Razor Ltd. [1968] 3 All E.R. 698, 700, cited by Slade J. in In re Castle New Homes Ltd. [1979] 1 W.L.R. 1075, 1086. What Buckley J. said was:

"The powers conferred by section 268 are powers directed to enabling the court to help a liquidator to discover the truth of the circumstances connected with the affairs of the company, information of trading, dealings, and so forth, in order that the liquidator may be able, as effectively as possible and, I think, with as little expense as possible and with as much expedition as possible, to complete his function as liquidator, to put the affairs of the company in order and to carry out the liquidation in all its various aspects, including, of course, the getting in of any assets of the company available in the liquidation."”

 

I note your apparent and continued refusal to afford me the complete files requested and that the correspondence between us appears to be going around in circles. In light of the same I will now start drafting pleadings for an Application for a production order pursuant to Sections 234, 235 and 236 of the Insolvency Act 1986.

 

Please confirm if indeed you will accept service direct or instruct solicitors to discharge the same."

Thanks (0)
paddle steamer
By DJKL
27th Aug 2014 17:56

If stands in place of client

If the IP stands in place of  the client send him an engagement letter to execute which covers the charging cost for copying your correspondence file, if he is so entitled. £250 per hour should be about right.

I find it hard to believe that an e mail/ letter to a client's accountant and a copy of the response from said accountant to the client is the client's records. The client's records are surely those copies of the correspondence that they, the client, kept.

It would be different if you acted in this capacity as agent for the client, say raising invoices on the client's behalf and negotiating /settling transactions on the client's behalf, but in the absence of this sort of activity, if your role was merely to record the client's business transactions, then surely all that can be requested is documents re this that belong to the client, anything beyond this is not the client's property.

Were the members of the LLP entitled to see your correspondence file? I doubt it.

Thanks (2)
paddle steamer
By DJKL
27th Aug 2014 18:05

Seems to rest on "employment under a contract for services "
235Duty to co-operate with office-holder.

(1)This section applies as does section 234; and it also applies, in the case of a company in respect of which a winding-up order has been made by the court in England and Wales, as if references to the office-holder included the official receiver, whether or not he is the liquidator.

(2)Each of the persons mentioned in the next subsection shall—

(a)give to the office-holder such information concerning the company and its promotion, formation, business, dealings, affairs or property as the office-holder may at any time after the effective date reasonably require, and

(b)attend on the office-holder at such times as the latter may reasonably require.

(3)The persons referred to above are—

(a)those who are or have at any time been officers of the company,

(b)those who have taken part in the formation of the company at any time within one year before the effective date,

(c)those who are in the employment of the company, or have been in its employment (including employment under a contract for services) within that year, and are in the office-holder’s opinion capable of giving information which he requires,

(d)those who are, or have within that year been, officers of, or in the employment (including employment under a contract for services) of, another company which is, or within that year was, an officer of the company in question, and

(e)in the case of a company being wound up by the court, any person who has acted as administrator, administrative receiver or liquidator of the company.

(4)For the purposes of subsections (2) and (3), “the effective date” is whichever is applicable of the following dates—

[F1(a)the date on which the company entered administration,]

(b)the date on which the administrative receiver was appointed or, if he was appointed in succession to another administrative receiver, the date on which the first of his predecessors was appointed,

(c)the date on which the provisional liquidator was appointed, and

(d)the date on which the company went into liquidation.

(5)If a person without reasonable excuse fails to comply with any obligation imposed by this section, he is liable to a fine and, for continued contravention, to a daily default fine.

Thanks (1)
Replying to johnhemming:
Red Leader
By Red Leader
27th Aug 2014 19:03

Blimey!

He'd make me dig in as well. Don't let the b@$!@rd win.

Send him some documents now - whatever you think is reasonable. If it goes to court, it will look like he is the one being unreasonable which will go well for you with the judge.

Good luck.

Thanks (3)
Replying to paulwakefield1:
avatar
By mumpin
27th Aug 2014 19:29

Have you got a professional body?

I've had a couple of tedious IP's try to bully me over the past year.

The ACCA helpline have been quite useful in suggesting replies. It also lets you distance yourself from the fray by responding along the lines of "I have turned to my professional body for guidance on how to respond to your request and they suggest..."

Also kicks it down the road by two months for the letter exchange. If you do get into email exchanges then I would take 14 to 21 days to respond. Don't bat things straight back like you would with a client.

Good luck with it.

Thanks (3)
Locutus of Borg
By Locutus
27th Aug 2014 19:14

Tell the IP to book an appointment
Since this irritating jobsworth isn't going to be reasonable with you, I would tell him to book an appointment to visit your office. He can then go through the correspondence file himself in his own time, with minimal cost and disruption to you. You would have technically complied with the request to make the records available to the IP. It is up the IP to decide what is important and how much time he should waste copying stuff.

If he wants you to do anything that sounds remotely like work (such as answering questions) then give him an engagement letter to sign and your hourly charge rate.

Thanks (1)
avatar
By neileg
28th Aug 2014 09:22

Bullies

IPs do often have a difficult job but that is no excuse for bullying.

I have in the past encountered this sort of attitude from an IP (joint receivers actually) which ended in court and I won and was awarded compensation.

Thanks (1)
avatar
By chatman
02nd Sep 2014 12:25

Pompous

Is it just me or does the IP have a very pompous style of writing?

Thanks (2)
avatar
By Yoshik
02nd Sep 2014 12:27

IP

From the letter sent to you it would appear that he has this prepared for the regular occurences that it is needed.

It is interesting as I am dealing with the OR at present over a company in compulsory liquidation which results from a director setting up a company in direct competition to the one now in demise.

The OR is seeking a case against the director who appears to have acted wrongly and is building the case. He asked for copies of my files but when I stated that they were voluminous he and a clerk came to my office and spent 6 hours copying,

Not only that he took me for a good lunch and paid. 

He is sensible as he knows I will now cooperate.

Bull in a china shop gets you nowhere.

 

 

 

Thanks (1)
avatar
By Peter-S
02nd Sep 2014 14:18

IP

As suggested this seems a stock letter to send to anyone who doesn't jump.

 

I would respond that, as one accountant to another, you anticipated he would appreciate that you were not refusing to supply information but clarify exactly what may beneficially be provided and, in the absence of a crystal ball, you did not appreciate that the former client had not retained any records what so ever for his inspection. Accordingly your request for specificity was not at all absurd.

I would pass on a copy of the engagement letter (he doubtless wants to see what roles you were 'contracted' to under take assuming the client actually signed the letter) and then state that there is no 'apparent lack of understanding' and your files are available for inspection and copying at your premises if he would be kind enough to make an appointment. Alternatively you will be happy to pass the records to your solicitor for him to inspect there instead.

 

 

 

 

 

 

 

Thanks (0)
avatar
By pauljohnston
02nd Sep 2014 14:57

copying at your premises

Is it worth saying that he can not remove the files from the office and that if wishes to use your copying facilitites it is 5p a side for B& W and 15p a side for colour.

It appears this could be very expensive for you otherwise.

I like DJKL's suggest of Terms of Engagement.

 

I suspect that his refusal to complete may be viewed by the Court as being obstructive.

Thanks (0)
avatar
By qad999
02nd Sep 2014 16:06

awkward bully

Sounds like he is one.... Your correspondence file should just contain your office copies  of correspondence already sent to the client, tell him he should really ask the client what he's done with them , and S 234/5 mentions "reasonableness" if you think he 's not being reasonable, tell him... at the end of the day you want to co-operate and there are some good points made in the above posts to reign him in a little

ps you say you sent the excel cash book, but you must have some sort of extended trial balance or working paper showing the trail from books of prime entry to final accounts (which belong to client) , so maybe this is what he is alluding to ?

 

Thanks (0)
avatar
By Steve McQueen
06th Sep 2014 00:46

Update
Thank you all for the above.

I've had a week if cr*p from this guy.

I've tried everything above and yet he's issued an application under IA 86 s234-236 to take me to Court.

This guy has publicly written that it's his duty in all cases he takes to undertake fishing trips (his words) and he doesn't understand why other professionals moan when he does.

The man it a complete moron and whilst full of section numbers and legal mumbo jumbo has never actually done a real days work in his life.

The one good thing I leant having spent a couple of hours googling him was that he took a right beating a few years ago when he tried this same nonsense with a top 10 firm who then hire Mr QC to fight back.

Well I don't have their legal budget, but I'm more than happy to meet this ar*ehole in Court and say exactly what I've been saying all week - namely he has everything and there isn't anything else.

Thanks (0)
avatar
By qad999
06th Sep 2014 23:16

dont be intimidated

face in him court , and remain cool, seem reasonable .. get the judge on your side.. tell him you have supplied all the records belonging to the client .. your file is your property being the office copies only ... and don't forget to ask for costs

Thanks (1)
avatar
By qad999
06th Sep 2014 23:20

ps

perhaps ask why he hasn't pursued the client for these records, after all you provided the client with them, .... he's after you as the easy target because he's lazy  .. tell the judge

Thanks (1)