Instruments reported
At its meeting on 16 December 2020 the Committee scrutinised a number of instruments in accordance with Standing Orders. It was agreed that the special attention of both Houses should be drawn to three of those considered. The instruments and the grounds for reporting them are given below. The relevant departmental memoranda are published as appendices to this report.
1S.I. 2020/1349: Reported for elucidation
Corporate Insolvency and Governance Act 2020 (Coronavirus) (Suspension of Liability for Wrongful Trading and Extension of the Relevant Period) Regulations 2020
1.1The Committee draws the special attention of both Houses to these Regulations on the ground that they require elucidation in one respect.
1.2These Regulations, which are subject to the made affirmative resolution procedure, concern wrongful trading under sections 214 and 246ZB of the Insolvency Act 1986 (“the 1986 Act”). Under those provisions, a director of a company can in certain circumstances be made to contribute to the assets of a company in insolvency or administration if they carried on trading when they knew or should have known that the company was failing.
1.3Section 12 of the Corporate Insolvency and Governance Act 2020 (“the 2020 Act”) in effect suspended the wrongful trading regime in Great Britain, in response to the coronavirus public health emergency, by providing that for the purposes of section 214 or 246ZB the court should assume that a director was not responsible for any worsening of the financial position of a company or its creditors that occurred from 1 March 2020 to 30 September 2020. These Regulations, which are made under the 2020 Act, revive the suspension of the wrongful trading regime for the period from 26 November 2020 to 30 April 2021, by replicating the assumption provided for in section 12.
1.4The Committee asked the Department for Business, Energy and Industrial Strategy whether the assumption is intended to be absolute, or whether it is capable of being rebutted by evidence that a director’s behaviour worsened the financial position of the company or its creditors for reasons, or in ways, that had nothing to do with the public health crisis. In a memorandum printed at Appendix 1, the Department explains that the assumption is intended to be absolute. The Department also argues that to read the assumption as rebuttable would make it nugatory. The Committee does not agree: it would have been both rational and effective to require a court to assume that a decision to continue trading during the pandemic was not culpable, unless the inevitability of insolvency was clearly shown to be due to factors that had nothing to do with the public health crisis. Such a policy would, indeed, have been in accordance with the statement of the Minister at the Report Stage of the Bill for the 2020 Act in the House of Lords that “the suspension does not mean that a struggling company could just carry on trading without any regard for the consequences, but that, if it unfortunately enters insolvency, the directors will not face personal liability for using their best endeavours and trading while the pandemic is having such an impact on businesses”. Nevertheless, the Committee notes the Department’s assertion that the intention is for the assumption to be absolute. (Whether that intention has been achieved as a matter of law is, of course, a matter for the courts.) The Committee accordingly reports regulation 2(1) for elucidation, provided in the Department’s memorandum.
2S.I. 2020/1276: Reported for requiring elucidation
Road Vehicles (Display of Registration Marks) (Amendment) Regulations 2020
2.1The Committee draws the special attention of both Houses to these Regulations on the ground that they require elucidation in one respect.
2.2These Regulations, which are subject to the negative resolution procedure, permit a vehicle to display a green device next to the registration plate to indicate that it “cannot produce any tailpipe emissions”. The Committee asked the Department for Transport to explain what is intended to be meant by that expression (in regulation 4(c), inserted paragraph 11(a)). In a helpful memorandum printed at Appendix 2, the Department explains that it is intended to cover vehicles that do not directly emit greenhouse gases from an exhaust, including both electric vehicles without a tailpipe and also converted petrol or diesel vehicles which retain a tailpipe but no longer emit through it. The Committee accordingly reports regulation 4(c) for requiring elucidation, provided in the Department’s memorandum.
3S.I. 2020/1280: Reported for failure to comply with proper legislative practice
Air Navigation (Isle of Man) (Amendment) Order 2020
3.1The Committee draws the special attention of both Houses to this Order on the ground that it fails to comply with proper legislative practice in one respect.
3.2This Order, which is not subject to any Parliamentary scrutiny procedure (see below), amends the Air Navigation (Isle of Man) Order 2015 (S.I. 2015/870) to remove provisions made redundant by domestic Isle of Man legislation.
3.3Paragraph 3 of the Explanatory Memorandum asserts that the Order is not subject to Parliamentary procedure. The Order was nonetheless laid before Parliament, apparently in reliance on procedural provisions in the Civil Aviation Act 1982 that would have included Parliamentary scrutiny procedure. The Committee asked the Department for Transport to explain. In a memorandum printed at Appendix 3, the Department explains that as the relevant procedural provisions of the 1982 Act were not extended to the Isle of Man, Orders under that Act in relation to the Isle of Man are not subject to Parliamentary procedure. The Department explains that the Order was laid before Parliament by error. The Committee accordingly reports the Order for failure to comply with proper legislative practice, acknowledged by the Department.
3.4(The Department’s memorandum also contains helpful assurances of steps taken to ensure that people affected by this instrument would have sufficient time to prepare for its coming into force, despite the non-application of the 21-day rule to this class of instrument.)
Published: 18 December 2020 Site information Accessibility statement