BUJ Architects LLP v Investin Quay House Ltd
| Jurisdiction | England & Wales |
| Judge | Mullen |
| Judgment Date | 20 August 2021 |
| Neutral Citation | [2021] EWHC 2371 (Ch) |
| Docket Number | Case No: CR-2020-003129 |
| Court | Chancery Division |
In the Matter of Investin Quay House Ltd (a company registered in Jersey with company number 114622)
And in the Matter of the Insolvency Act 1986
[2021] EWHC 2371 (Ch)
ICC JUDGE Mullen
Case No: CR-2020-003129
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES LIST (ChD)
Royal Courts of Justice
Rolls Building
Fetter Lane
London EC4A 1NL
Ms Chantelle Staynings (instructed by IBB Law) for the Petitioner
Mr Stuart Issacs QC (instructed directly) for the Respondent
Mr Thomas Cockburn (instructed by GSC Solicitors) for Local London Quay House Limited (a supporting creditor)
Hearing date: 8 th June 2021
Approved Judgment
ICC JUDGE Mullen
This is my judgment following the preliminary hearing of a winding-up petition presented on 27 th July 2020 by BUJ Architects LLP (“the Petitioner”) against Investin Quay House Ltd (“the Company”) seeking the winding up of the Company under the Insolvency Act 1986 (“the 1986 Act”).
The petition is based on a debt of £354,000, together with interest, payable by the Company to the Petitioner under an order of Waksman J, sitting in the Technology and Construction Court (“the TCC Proceedings”). That order was sealed on 20 th November 2019 and bears the date 18 th October 2019, but it appears that the latter date is an error and should read 15 th November 2019. The debt is not disputed and it has not been paid.
There are also two supporting creditors. The first, Local London (Quay House) Limited (“Local London”), claims a sum of £665,300, together with interest, due under an award, dated 18 th June 2019, made following a binding expert determination. The second, TC Developments (South East) Limited, claims a sum of at least £180,000, together with interest, which is also payable under Waksman J's order.
The Company is registered in Jersey. On 16 th October 2020, Deputy ICC Judge Schaffer ordered that the petition be served at the offices of Countrywide Project Management Limited (“Countrywide”) in Solihull. The Company appealed that order and it was stayed by Miles J on 2 nd November 2020 pending the outcome of the application for permission to appeal. The Petitioner applied to set aside that stay.
The application for permission to appeal was withdrawn and, on 18 th November 2020, Miles J gave directions by consent for the filing of the Company's evidence for the purposes of the preliminary hearing of the petition provided for by paragraph 8 of the Insolvency Practice Direction relating to the Corporate Insolvency and Governance Act 2020 (“the CIGA PD”) and in opposition to the petition. He also reserved the costs of the Company's application for permission to appeal and of the Petitioner's application to set aside his order to the preliminary hearing.
The Company opposes the petition on two grounds. First, it contends that coronavirus has had a financial effect on it such that the court may not make a winding-up order by reason of Schedule 10 of the Corporate Insolvency and Governance Act 2020 (“the 2020 Act”). Secondly, it contends that this court has no jurisdiction to make a winding-up order in any event as the Company's centre of main interests (“COMI”) for the purposes of the recast EU Regulation on Insolvency Proceedings (“the EU Regulation”) is in Jersey.
The hearing
Ms Chantelle Staynings appeared for the Petitioner, Mr Stuart Issacs QC appeared for the Company and Mr Thomas Cockburn appeared for Local London as supporting creditor. The hearing was listed for half a day, which was inadequate to hear submissions on the costs reserved by Miles J's order of 18 th November 2020 or to give judgment on the principal issues. A proportion of the hearing was taken up with the Company's application for an adjournment. That application is the subject of a separate judgment that I gave at the time, of which a transcript has been prepared. For present purposes I need only say that the Company was placed into voluntary liquidation in Jersey on 3 rd June 2021 and, on 7 th June 2021, Mr John Downer, the director of the Company, obtained permission from the Royal Court of Jersey to bring an application on the Company's behalf to injunct the Petitioner from pursuing the petition. The Royal Court declined to grant an injunction on an interim basis. I similarly declined to adjourn the hearing to abide the outcome of the proceedings in Jersey. I understand that the substantive hearing is due to take place on 27 th August 2021.
It was however possible in the time available to hear the submissions of the parties on the question of the effect that coronavirus is alleged to have had on the Company and on the court's jurisdiction to wind up the Company in the light of the evidence filed by the parties. This consisted of the witness statements of:
i) Mr Andrew Olins, the solicitor for the Petitioner, dated 22 nd July 2020 and 28 th July 2020;
ii) Mr Downer on behalf of the Company, dated 3 rd December 2020 and 6 th June 2021;
iii) Mr Terrance Alford, a real estate investment and development specialist engaged as a consultant by the Company, dated 5 th February 2021;
iv) Mr Simon Heilpern, the director of Local London, also dated 5 th February 2021.
Also in evidence were documents from the TCC Proceedings, including:
i) an affidavit of Mr Stephen Whale, a director of the Company, dated 5 th November 2018, made in response to an application made by the Petitioner for a freezing order in the TCC Proceedings; and
ii) a statement from Mr Freddie Heaf, a member of the Petitioner, dated 31 st October 2019, prepared for the trial in those proceedings.
The Company
The Company was registered in Jersey on 17 th December 2013. As its name implies, its principal purpose was to develop Quay House, 2 Admirals Way, London E14 9XG (“Quay House”), which was purchased on 28 th February 2014 at a price of around £11 million. According to Mr Downer, funding for the purchase was provided by Jersey-based financial institutions and by Mr Downer himself.
The Company appointed the Petitioner as architects for the development project under a contract dated 5 th September 2017, with the object of securing planning permission for development of Quay House as a hotel. The contract was expressed to be subject to English law and to be subject to the exclusive jurisdiction of the courts of England and Wales. It was the dispute arising from this contract that led to the TCC Proceedings and Waksman J's order.
The property was sold on 27 th July 2018 at a price of about £26 million. Only £109,477.20, plus interest, remains in bank accounts in the Company's name in Jersey. As appears from the evidence of Mr Whale, Mr Downer received approximately £17 million in loan repayments and £5.6 million in interest payments. The bulk of these payments were made within the two years prior to presentation of the petition. There is thus the potential, on the Petitioner's case, for a preference claim to be brought pursuant to section 239 of the 1986 Act.
The Company's registered addresses have at all times been in St Helier, Jersey. For much of its trading life it had seven directors. Six of the directors, Mr Whale, Ms Donna McCrorie, Mr Roberto Monticelli, Mr Paul Weir, Ms Linda Garnier and Mr Darren English, are said by Mr Downer to have been directors of the JTC Group. Mr Downer says that JTC Group was paid a fee for providing:
“substantial experience and expertise in running property companies and making business decisions to ensure the Company was properly run in accordance with the requirements of Jersey laws.”
He exhibits the terms of engagement with JTC (Jersey) Ltd, dated 7 th December 2015, which provides that “services will be limited to the administration of the Entities”, excludes “the provision of legal, financial, tax or other such professional advice” and describes Mr Downer as “our principal client.” The “Entities” to which JTC was to provide its services are set out in the schedule to the terms of engagement. This has been redacted in the form in which it appears in bundle in that it is headed with the words “Schedule 1”, under which appears the words “(‘the Entities’)”, and the name of the Company appears halfway down an otherwise blank page.
One of the JTC directors, Mr English, resigned in October 2018 and another five resigned on 16 th July 2019, leaving Mr Downer as the Company's sole director. Mr Downer has not been resident in England and Wales since 2014 and now lives in Portugal. He does not dispute that the Company no longer carries on any business and that it is unable to pay its debts. Indeed, as I have said, steps were taken in Jersey to place it into liquidation.
The Coronavirus Test
Part 2 of Schedule 10 to the 2020 Act prevents a creditor from presenting a petition for the winding up of a company unless he has reasonable grounds for believing that:
“(a) coronavirus has not had a financial effect on the company, or
(b) the facts by reference to which the relevant ground applies would have arisen even if coronavirus had not had a financial effect on the company.”
The petition here sets out a statement to that effect, as required by Insolvency Rule 7.5(1), as amended by paragraph 19(3) of Schedule 10 to the 2020 Act, and the summary of the grounds for that belief, as required by paragraph 3 of the CIGA PD. Where it appears to the Court that coronavirus has had a financial effect on the company prior to presentation of the petition, it may not make a winding up order unless it is satisfied that the facts by reference to which the relevant ground for winding up applies would have arisen even if coronavirus had...
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...[2019] 4 SLR 1343 at [52]–[61] (Aedit Abdullah J). [49] Supra at [31]. [50] Supra at [18] and [25]. [51] Re Investin Quay House Ltd [2021] EWHC 2371 (Ch) at [52] Supra. [53] 570 B.R. 687 (Bank. S.D.N.Y. Aug. 24, 2017); the decision was upheld on appeal 585 B.R. 31 (S.D.N.Y. April 5, 2018). ......