Heating Electrical Lighting and Piping Ltd ((in Liquidation)) v Ross and Others

JurisdictionEngland & Wales
CourtChancery Division
JudgeHis Honour Judge Peter Langan
Judgment Date19 Oct 2012
Neutral Citation[2012] EWHC 3764 (Ch)

[2012] EWHC 3764 (Ch)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

His Honour Judge Peter Langan QC

(Sitting as a High Court Judge)

Between:
Heating Electrical Lighting and Piping Ltd (In Liquidation)
Claimant
and
(1) Ross
(2) Lowe
(3) Hussain
(4) Official Receiver
Defendants

Adam Deacock (instructed by Schofield Sweeney) for the Applicants

Sarah Harrison (instructed by) for the second Respondent

The third Respondent appeared in person

His Honour Judge Peter Langan QC:

Introduction

1

There is before the court an application by the liquidator of a company for the repayment of certain sums paid to a director out of the funds of the company. The application is made under s 212 (dealing with misfeasance) and/or s 239 (dealing with preferences) of the Insolvency Act 1986 (the 1986 Act). The director has died and his estate is insolvent. The claim against his estate is for judgment for the appropriate sums, together with interest and costs. As will appear later, there is no dispute as to the facts which, but for the insolvency, would justify the order which is sought. The only question for determination is whether the entry of such a judgment is barred by s 285(3) of the 1986 Act. The greater part of the hearing has been focused on a claim by the liquidator for costs against two of the proving executor of the director's last will. They were joined in the action pursuant to CPR r 19.8 and, putting matters as simply as possible, they contend that they are not to be treated in the same manner as persons who have actively and unsuccessfully defended a claim. Their contention is that there should be no order as to costs.

Parties and representation

2

Alan Ross was a director of the first applicant, Heating Electrical and Lighting Ltd (the company). The company is in liquidation. The second applicant (Mr Wood) is the liquidator of the company. The applicants have been represented by Mr Deacock.

3

Mr Ross has died. His estate has been named as the first respondent.

4

The second and third respondents (Mr Lowe and Mr Hussain respectively) are two of the three executors of the will of Mr Ross. Mr Lowe has been represented by Ms Harrison. Mr Hussain has appeared in person.

5

After the grant of probate, an order was made that the estate of Mr Ross be administered in bankruptcy. After the making of an insolvency administration order, the Official Receiver acts as receiver and manager of the estate until such time as a trustee in bankruptcy is appointed. By an order made at the pre-trial review, the Official Receiver was joined as fourth respondent, but he did not appear at the hearing.

Narrative

6

There is little or no dispute as to the history.

7

The company started to trade on 5 January 2009. Mr Ross was the sole director and shareholder.

8

In the latter part of 2009 the company was faced with a substantial claim in the employment tribunal by a former employee, Richard Smith (Mr Smith). The hearing was fixed for 1 March 2010.

9

On 18 December 2009 the company paid £48,920 to a third party in connection with the purchase of a car by Mr Ross.

10

On 9 February 2010 five payments of £9,000 each (£45,000 in total) were paid by the company into the personal bank account of Mr Ross.

11

On 10 February 2010 one payment of £8,000 and three payments of £9,000 each (£35,000 in total) were paid in the same manner.

12

On 19 February 2010 Mr Ross, accompanied by Mr Lowe who was acting as his business adviser, met Mr Wood in a public house. Mr Ross told Mr Wood that he wanted to put the company into liquidation in order to defeat Mr Smith's claim. After the meeting the company ceased trading.

13

Thereafter Mr Ross formally resolved to put the company into liquidation. He was advised by Mr Wood. Mr Wood was at the time unaware of the payments which I mentioned a few moments ago. He was also unaware of the fact that Mr Ross was intent on continuing to carry on the existing business under the aegis of a new company. In due course the statutory meetings of members and creditors were held, and on 17 March 2010 the company went into creditors' voluntary liquidation with Mr Wood as liquidator.

14

Mr Wood very soon discovered the payments which are the subject of this litigation. He asked Mr Ross for an explanation. The first explanation given (on 11 April 2010) was that 'I had the need to show I had a free balance of £120,000 to purchase a property … these sums were never used, my son obtained his own mortgage on the property'. Subsequently, Mr Ross's solicitors said (in a letter dated 22 October 2010) that the money not used for the son's purchase had been applied to discharging company debts.

15

On 22 October 2010, before anything was resolved between Mr Wood and Mr Ross, Mr Ross died. He left a will in which he named as executors Mr Lowe, Mr Hussain and a gentleman called Philip Moreland, who is the stepfather of Mr Ross's widow. 1

16

Mr Wood took the view that he should attempt to recover the payments from the estate of Mr Ross, but that he should not do so without obtaining the sanction of the creditors. He therefore convened a creditors' meeting for 23 November 2011. Mr Lowe attended the meeting. He confirmed that he was an executor of Mr Ross's will, but refused to allow Mr Wood to have a copy. He opposed the sanctioning of proceedings against the estate, relying on three alleged claims against the company, one on behalf of the estate, another by way of subrogation to the judgment which Mr Smith had obtained in the employment tribunal, and the third on behalf of Mr Ross's new company. All three proofs were rejected by Mr Wood, with the result that Mr Lowe was unable to vote against the sanctioning of proceedings, and Mr Wood was given the authority which he had sought.

17

At this stage it is convenient to interrupt the narrative by referring to correspondence between Mr Lowe (or his solicitors) and Mr Wood (or his legal representatives). The correspondence is extensive and it is not necessary to do more than give a flavour of it. The attitude displayed by Mr Lowe was described by Ms Harrison as 'posturing'. The description, in my judgment, qualifies for a prize for forensic charity.

18

As early as 21 December 2010 Mr Lowe wrote to Mr Wood, accusing Mr Wood of 'misfeasance and targeted malice', of having given advice to Mr Ross while 'consuming copious amounts of alcohol', of engaging solicitors who had a conflict of interest, and of being deliberately deceitful:

'I believe that you will continue to act unprofessionally in this matter because you are being influenced by outside people, to this end I believe that you will not allow votes where they should be allowed, as this will benefit your hidden agenda.

You therefore should be aware I will fund to challenge any decision by your office to not allow any legitimate votes in this matter.'

19

In a letter dated 31 (presumably an error for 30 June 2011 or 1 July), Mr Lowe told Mr Wood's solicitors that he saw:

'little reason to enter into further dialogue with you as your conduct is indeed questionable and you are clearly intent on making mischief and being vexatious.'

20

In a letter of 5 December 2011, Mr Lowe told Mr Wood that:

'I have made it very clear to you, if you wish to issue proceedings against me personally then do so and stop talking about it, I do not intend to be drawn in further to your lawyers' folly, my counterclaim will be made for my cost[s] and damages as a result of any precipitous action.'

Mr Wood was acting unprofessionally and was 'a person of very low integrity'.

21

I have selected these letters for no better reason than that they were written at intervals of approximately 6 months. They are typical of the intervening correspondence, which discloses on the part of Mr Lowe a determination not to co-operate with Mr Wood as liquidator, and manifests an intention to resist such proper inquiries and claims as Mr Wood might feel bound to make in carrying out his duties. All this was advanced in a manner which I would characterise as abusive.

22

I return to the chronology.

23

Mr Lowe was the first to issue proceedings. On 14 December 2011 he issued an application in which he challenged the decisions of Mr Wood to reject his votes at the meeting of 23 November and to admit the votes of Mr Smith.

24

On 23 December 2011 the applicants issued their claim against the first three respondents. In addition to the substantive relief claimed, the applicants asked that Mr Lowe and Mr Hussain 'or such other person(s) as the Court may think fit' should be appointed pursuant to CPR r 19.8(2)(b)(ii) to represent the estate of Mr Ross.

25

On 31 January 2012 both applications came before District Judge Jordan, who stayed the proceedings for 3 months. It appears that the object of the stay was to enable Mr Lowe and Mr Hussain to obtain a grant of probate. They were represented by counsel at the hearing.

26

The applications came back before District Judge Jordan on 11 May 2012. Mr Lowe and Mr Hussain were again represented by counsel. Three separate orders were made.

27

First, in Mr Wood's application, the court appointed Mr Lowe and Mr Hussain to represent the estate of Mr Ross. Directions leading to trial were given. These included an order that Mr Lowe and Mr Hussain file evidence by 28 June 2012; an order for attendance of witnesses for cross-examination; and a provisional listing for a 2-day hearing in the week of 15 October 2012.

28

The second order was also made in Mr Wood's application and was to the effect that the court ratified the issue and continuance of the proceedings. The costs of seeking that order were 'costs in the substantive application subject to the court's discretion at the determination of the case'. That somewhat opaque phrase seems to me to be...

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3 cases
  • Vidya Bhushan Goyal v Florence Care Ltd
    • United Kingdom
    • Chancery Division
    • 19 March 2020
    ...against the property or person of Mr Edwards in respect of that debt. He cited Heating Electrical Lighting and Piping Ltd v Ross [2012] EWHC 3764 (Ch), [2012] BPIR 1122 in support of that submission. That case is authority for the proposition that bringing and pursuing proceedings up to th......
  • Michael Wilson & Partners Ltd v Thomas Ian Sinclair
    • United Kingdom
    • Court of Appeal (Civil Division)
    • 16 April 2021
    ...the Court proceeding to judgment on a money claim, but only bars its enforcement: Heating Electrical Lighting & Piping Ltd v Ross [2012] EWHC 3764 (Ch) at [38] to [40] per HHJ Langan QC, followed in Hellard v Chadwick [2014] BPIR 163 at [34]–[41] by Registrar Barber. But that is becaus......
  • Christopher Wood as Trustee in Bankruptcy of Keith Lowe and Administrator of the Estate of Alan Lawrence Ross (Deceased) v Keith Lowe and Others
    • United Kingdom
    • Chancery Division
    • 5 May 2016
    ...had gone into liquidation. Mr Wood was appointed liquidator. In proceedings before HHJ Langan QC ( Heating Electrical Lighting and Piping Ltd (in liquidation) v (1) Ross, (2) Lowe and Ors [2012] BPIR 1122), Mr Wood brought misfeasance proceedings against Mr Ross's estate. His estate was ins......

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