Baker Hughes Ltd v CCG Contracting International Ltd
| Jurisdiction | Scotland |
| Judgment Date | 24 September 2004 |
| Docket Number | No 7 |
| Date | 24 September 2004 |
| Court | Court of Session (Outer House) |
Court of Session Outer House
Lady Smith
Companies - Liquidation - Existence of debt disputed - Whether petition for winding up should be dismissed - Insolvency Act 1986 (cap 45), sec 124(1)
Expenses - Liquidation of company - Existence of debt disputed - Abuse of process - Whether expenses should be awarded on agent/client party paying basis
Section 124(1) of the Insolvency Act 1986 provides that an application to the court for the winding up of a company shall be by petition presented either by, inter alia, any creditor.
A petition for winding up of a company was presented on the basis that the petitioners averred that they were creditors of the company in that they had paid Algerian taxes which were the liability of the company and the company had accordingly been unjustly enriched. The company averred that they had received tax advice that the petitioners should not have paid the taxes, and drew attention to the fact that the petitioners had invoked a contractual arbitration procedure. The respondents moved for dismissal of the petition on the basis that they seriously disputed that they had any liability to make payment to the petitioners. The petitioners argued that they should be allowed time to constitute the debt and the petition should be sisted rather than dismissed so as to retain the date of presentation of the petition to allow statutory challenge of certain transactions. The respondents moved for expenses on an agent/client party paying basis.
Held that: (1) if the debt was disputed in good faith, then the petitioners could not satisfy the statutory requirement that they be a creditor so as to have title to sue in a winding up (paras 10, 11); (2) even if there were room for departure from this in exceptional cases, the present case was not exceptional (para 10); (3) the petition was a serious abuse of process and should never have been lodged, and it was appropriate to award expenses on an agent/client basis (paras 18-20); and petition dismissed and expenses on agent/client party paying basis awarded.
Landauer & Co v Walter Alexander & Co LtdENR 1919 SC 492 distinguished.
Baker Hughes Ltd and Baker Hughes Inteq France sapetitioned the sheriff of Tayside Central and Fife at Stirling for the winding up of CCG Contracting International Ltd. After sundry procedure the cause was remitted to the Court of Session by interlocutor of the sheriff, dated 13 May 2003. The cause called before the Lord Ordinary (Lady Smith), on 24 September 2004, on the respondent's motion for dismissal of the petition and, on 15 October 2004, in respect of the respondent's motion for expenses.
Cases referred to:
British Railways Board v Ross & Cromarty County CouncilSC 1974 SC 27; 1974 SLT 274
Company (Re a)WLRUNK [1992] 1 WLR 351; [1992] 2 All ER 797
Company (Re a), ex p Avocet Aviation Ltd [1992] Ch D 869
Claybridge Shipping Co SA (Re) [1981] Com LR 107
Landauer & Co v Walter Alexander & Co LtdENR 1919 SC 492; 1919 2 SLT 2
Mann and anr v GoldsteinWLRUNK [1968] 1 WLR 1091; [1968] 2 All ER 769
North East Ice & Cold Storage Co Ltd v Third, Lord Penrose, 4 June 1996, unreported
Plasticisers Ltd v William R Stewart & Sons (Hacklemakers) Ltd and orsSC 1972 SC 268; 1973 SLT 58
Russian and English Bank (Re)ELR [1932 ] 1 Ch 663
Selectmove (Re)WLRUNK [1995] 1 WLR 474; [1995] 2 All ER 531
Walker v McNeil 1981 SLT (Notes) 21
At advising, on 15 October 2004-
Lady Smith-
[1] In May 2002, the petitioners presented a petition for the winding up of the respondents, in Stirling Sheriff Court. Various procedures followed, including the appointment by the sheriff of a provisional liquidator which was recalled as the result of an appeal to the Inner House. The cause was subsequently remitted to the Court of Session by interlocutor of the sheriff, dated 13 May 2003.
[2] The case called before me on 24 September 2004 in respect of the respondents' motion for dismissal of the petition. The petition had been presented in circumstances where the petitioners averred that they were creditors of the respondents in the sum of US $1,063,452. The manner in which that debt had arisen was, according to the averments, that the second petitioners had paid, in Algeria, certain taxes which were, it was said, in fact the liability of the respondents. The respondents were, accordingly, it was averred, liable in respect of that payment to both petitioners.
[3] The first petitioners and the respondents had been in a contractual relationship whereby the respondents had agreed to design and build a base de vie at Hassi Messaoud, Algeria. The particular averments which purport to explain the nature of the tax liability in question can be found at p 9 of the open record where the following is stated:
"Following completion of the base de vie by the respondents, the petitioners received demands from the Algerian tax authorities in respect of a withholding tax called IBS and in respect of Algerian VAT. In respect of IBS, the respondents are liable to pay to the Algerian tax authorities a sum representing 8 per...
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