Darryl Preston and Another v Mr Elliot Green (Liquidator of Cre8atsea Ltd) and Others
| Jurisdiction | England & Wales |
| Judge | Mr. Registrar Briggs,Mr Registrar Briggs |
| Judgment Date | 11 October 2016 |
| Neutral Citation | [2016] EWHC 2522 (Ch) |
| Docket Number | Case No: 10089 OF 2011 |
| Court | Chancery Division |
| Date | 11 October 2016 |
[2016] EWHC 2522 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Mr. Registrar Briggs
Case No: 10089 OF 2011
Mr Preston In Person ( Acting With A McKenzie Friend)
Evie Barden (instructed by Freeths LLP) for Elliot Green
Joseph Curl (instructed by Dla Piper LLP) for Vodafone Limited
Mark Mullen (instructed by The Solicitors' Office of HMRC) for the Commissioners for HMRC
Hearing date: 5 October 2016
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
The first Applicant, Mr Preston, was a director of Cre8atsea Limited (the "Company") and claims to be a contributory and creditor of the Company. The Company was incorporated on 28 August 2002, and operated health salons and spas. It also sold services and products to the maritime industry. The Company underwent several name changes. It was wound up by the Court on 11 March 2013 at a final hearing of the petition which was presented on 18 November 2011 by the third Respondent ("HMRC"). Mr. Preston's application is for rescission of the winding up order.
Events leading to the winding up of the Company
The petition was presented by the third Respondent HMRC, in respect of assessments for corporation tax. The presentation of the petition spurred the Company into action and it filed late returns for HMRC to consider. In the meantime, on 3rd January 2012, HMRC issued an assessment for VAT in the sum of £1,303,098.47. At an adjourned hearing of the petition in July 2012, HMRC confirmed a nil assessment in respect of corporation tax and as the petition was not based on the VAT assessment did not wish to prosecute the petition. The second Respondent, Vodafone Limited ("Vodafone") was represented and sought substitution on a debt of £27,734.42. The court ordered an adjournment, substitution, amendment of the petition and re-verification.
At the next adjourned hearing, a month later, the Company disputed the Vodafone debt. American Express Services Europe Limited provided notice that it wished to support the petition as the Company owed £61,895.73. An adjournment was granted. The hearing of the petition came back to court on 24th September 2012 but on the morning of the hearing Vodafone was served with a witness statement from Mr Preston contending that the wrong entity had been billed and a company called Harding Brothers Limited should have been invoiced instead. It was later discovered that Harding Brothers Limited was a former name of the Company.
On 29th January 2013 the petition was listed for a hearing on 11th March 2013 with a time estimate of one hour. Although the order does not record attendance by the Company, the undisputed evidence from Mr Way of Vodafone is that the Company was represented by counsel, and the dispute as to the debt was withdrawn. Mr Way has provided a note of the judgment. Registrar Barber said
"I have before me what is now an undisputed petition following the substitution of the petitioner for HMRC, effective on 23 rd July 2012, some 8 months ago. The company indicated that it would be disputing the petition on the basis of some substantial ground: that the petitioner was seeking payment from the wrong entity……Following the petitioner's filing of evidence in response to the position, the company went singularly quiet, perhaps because the petitioner's evidence of change of name demonstrated beyond doubt that the petitioner had the right legal entity…….Mr Clark of counsel (very recently instructed) seeks an adjournment to allow time to pay. He seeks 42 days. Notwithstanding being allowed 20 minutes to take instructions as to the manner [the debt] is to be paid, Mr Clark is unable to assist on the fine detail, simply confirming his client's intentions to raise the sums within a period of 6 weeks."
The application for a further adjournment was successfully resisted, and an order winding up the Company made on the undisputed debt. Mr Preston was not present at the final hearing.
Standing to make an application to rescind the winding up order
Rule 7.47 of the Insolvency Rule 1986 (Rules) provides the court with jurisdiction to order rescission of a winding up order:
"Every court having jurisdiction under the [Insolvency Act 1986 to wind up companies] may review, rescind or vary any order made by it in the exercise of that jurisdiction………"
Rule 7.47(4) provides that an application is to be made within 5 business days of the winding up order. The Practice Direction on Insolvency Proceedings (2014) elaborates:
"11.7.2. The application should normally be made within five business days after the date on which the order was made (rule 7.47(4)) failing which it should include an application to extend time. Notice of any such application must be given to the petitioning creditor, any supporting or opposing creditor and the Official Receiver.
11.7.3 Applications will only be entertained if made (a) by a creditor, or (b) by a contributory, or (c) by the company jointly with a creditor or with a contributory. The application must be supported by a witness statement which should include details of assets and liabilities and (where appropriate) reasons for any failure to apply within five business days".
At the hearing of the application Mr Preston accepted he was not a contributory of the Company. He claimed to be a creditor. The basis of his claim is set out in his first witness statement dated 20 May 2015 where he states that the Company owes him £3,643 "which is made up of unpaid out of pocket expenses which were incurred in relation to costs incurred in the course of my work and duties undertaken for the company." No further elaboration is provided in any of his witness statements.
At the hearing of the application a small clip of documents was handed to the court. I was informed the documents were sent to the Respondents the day before the hearing. The clip comprises two invoices. The first is dated 1 st November 2010 and is for "reimbursement of emergency consumables for vessels". The sum sought on the face of the invoice is £808. The invoice notes that the consumables were paid in cash. The supporting sales proforma shows that only approximately £580 was invoiced. The accounts of the Company for the year ending 31 December 2010 do not disclose this related party transaction. The purchase of goods on behalf of the Company does not relate to "duties undertaken for the company". The invoice mentions no duties undertaken.
The expenditure could possibly fall within the category of 'out of pocket expenses' although the phrase is usually used when an employee has to spend money for their sustenance during the course of a working day. No explanation has been given as to why the Company did not repay the debt between October 2010 and the presentation of the petition. Mr Preston is not mentioned on the supporting invoice from the seller of the consumables. The buyer's address is stated as being 67 Bond Street London, which is not an address occupied by Mr Preston. There is no evidence that the Company did not pay for the goods direct, or evidence that even if Mr Preston did pay for the goods on behalf of the Company, he had not been repaid. Miss Barden, acting for the liquidator, informs the court that there is nothing in the Company books and records that supports the claim of the debt.
The second invoice relates to storage of "stock & assets" for the period 2011 and 2012. No particulars are provided as to what stock or assets were in storage. The invoice is dated 1 st December 2012 after the Company assets were said to have been sold. There is no evidence that Mr Preston paid for the storage if stock and assets were stored. In any event it is not easy to describe the payment for storage of unspecified goods in an unspecified location over what appears to be a two-year period as "unpaid out of pocket expenses which were incurred in relation to costs incurred in the course of my work and duties undertaken for the company."
Mr Preston was asked in court to provide an explanation as to why the invoices were not provided to the Official Receiver, the liquidator or the Respondents to the application until the day before the hearing. Mr McGuinness informed the court that the documents formed part of the exhibit to Mr Preston's first witness statement. The invoices before the court in the newly provided clip, are numbered from page 170 giving support to the argument that they at one time formed part of the exhibit. Mr Curl on behalf of Vodafone, however demonstrates a serious flaw in the contention. In paragraph 6 of Mr Preston's first witness statement he referred to page 170 of the exhibit as being an extract from Companies House. In fact, page 170 of the exhibit is an email dated 16 May 2013. The invoice now tendered as a genuine document is also numbered page 170 of the exhibit. There is no evidence from Mr Preston on this issue.
In making decisions about the credibility of evidence set out in an affidavit on an application for summary judgment, Bingham LJ (as he was) said in Bhogal v Punjab National Bank, Basna v Punjab National Bank [1988] 2 All ER 296 at 303
"But the correctness of factual assertions such as these cannot be decided on an application for summary judgment unless the assertions are shown to be manifestly false either because of their inherent implausibility or because of their inconsistency with...
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Rescission Of Winding Up Orders Extension Of Time
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