Mulalley and Company Ltd v Regent Building Services Ltd and Another
| Jurisdiction | England & Wales |
| Judge | David Stone |
| Judgment Date | 23 November 2017 |
| Neutral Citation | [2017] EWHC 2962 (Ch) |
| Docket Number | Case No: CR-2017-004702 |
| Court | Chancery Division |
| Date | 23 November 2017 |
[2017] EWHC 2962 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND & WALES
INSOLVENCY AND COMPANIES LIST (ChD)
IN THE MATTER OF MULALLEY AND COMPANY LIMITED
AND IN THE MATTER OF THE INSOLVENCY ACT 1986
7 Rolls Buildings
Fetter Lane
London, EC4A 1NL
David Stone
(sitting as a Deputy High Court Judge)
Case No: CR-2017-004702
Mr David Sawtell (instructed by Silver Shemmings Ash LLP) for the Applicant
The Respondents were not represented and did not appear
Hearing date: 16 November 2017
David Stone (sitting as Deputy High Court Judge):
Before the Court is an adjourned application of Mulalley & Company Limited ( Mulalley) for injunctions to restrain the Respondents, Regent Building Services Limited ( Regent) and Mr Christopher White ( Mr White) from presenting a petition to wind up Mulalley on the basis of the debts set out in a statutory demand dated 9 June 2017. Those debts are disputed.
Mulalley is represented in these proceedings by Mr David Sawtell of counsel. Regent, at least, has previously had the benefit of counsel and a firm of solicitors. The Respondents are currently not represented in these proceedings, although Mr White says in correspondence that he now represents both Regent and himself. For reasons that will become clear, Mr White did not appear at the hearing before me. Mr Sawtell advanced Mulalley's case carefully, scrupulously and fairly. He also assisted the Court by pointing out, in detail, those matters which Mr White might have raised had he attended the hearing, and which Regent might have raised had it been represented. I am grateful to him and to those instructing him for the careful, detailed and helpful way in which that was done.
Because of Mr White's absence from the hearing, I have thought it best to give this written judgment, rather than to require him and Regent to go to the trouble and expense of obtaining a transcript of an orally-delivered judgment. As will become clear, at the hearing I indicated that I would deny Mr White's application for an adjournment: this judgment includes my reasons for so doing. Having declined the adjournment application, I went on to hear:
a) Mulalley's adjourned application for injunctive relief against Regent and Mr White; and
b) Mulalley's application for costs against Regent and Mr White.
The evidence before the Court consisted of:
a) two witness statements of Teresa Taylor, a director of Mulalley and its Financial Director;
b) two witness statements of Christopher James Coveney, a solicitor at Silver Shemmings Ash LLP, who act for Mulalley; and
c) a witness statement of Mr White.
None of these witnesses was cross-examined, and I accept their evidence.
I also had the benefit of Mr Sawtell's skeleton argument prepared for the adjourned 29 June 2017 hearing, and an updated skeleton argument prepared for this hearing. I also had before me a skeleton argument prepared by Regent's then counsel for the hearing on 29 June 2017.
Background
Mulalley is a construction company, in good financial standing. The disputed debt arises from building works conducted for Mulalley by its subcontractor, Crest Contracting Limited ( Crest), which provided subcontracted ceramic tiling services to Mulalley. Mr White was, at the relevant times, a director of Crest, and Mulalley's point of contact at that company. Mulalley's Subcontract General Terms and Conditions, which applied as between Mulalley and Crest, prohibited the assignment of the subcontract by the subcontractor (Crest) without the written consent of the main contractor (Mulalley).
A third party presented a winding up petition against Crest on 28 September 2016. The petition was advertised on 16 October 2016. On 21 December 2016 Crest's name was changed to Acquisition 395326831 Limited ( Acquisition). On that day, Mr White resigned as a director of Crest/Acquisition. The affairs of Crest/Acquisition are now in the hands of the Official Receiver.
Regent/Mr White served a first statutory demand on Mulalley dated 9 March 2017. That demand was signed by Mr White. The Particulars of Debt note "The assigned creditor, Regent Building Services Limited (Christopher White), demands payment." The demand was for £30,915.29, made up of a number of smaller debts alleged to be owed by Mulalley to Crest.
On 20 March 2017, Mulalley provided a detailed description of why each of the relevant debts was disputed, and attached approximately 60 pages of documentary evidence to support its disputation. Mr White responded on behalf of Regent noting:
"Your letter of today's date is noted, but again the contents have no significance and do not address the demand issued.
Your comments and attitude are without merit (or in litigation terms vexatious). Please again note that this action is for unpaid amounts due and not for orders of work agreed and complete, the deed of assignment is a legal document and holds its own merits.
If payment is not made in full by the deadline of the demand we reserve the right to take action without further notice to yourselves."
Through its solicitors, and after further correspondence, Mulalley made an application to this court to restrain Regent from presenting a petition to wind up Mulalley on the basis of the 9 March 2017 statutory demand. A hearing was set for 3 April 2017, but Regent then agreed to withdraw the statutory demand, and Mulalley's application to the court was withdrawn.
Shortly thereafter, on 29 May 2017, Mr White made further threats to present a winding up petition against Mulalley. He also noted: "We would also confirm that we will be following up with an official complaint against the Officers / Directors of Mulalley & Company Limited to the Investigations and Enforcement Services and HMRC as to their activities".
Regent/Mr White served a second statutory demand by email of 10 June 2017. This was again signed by Mr White, was for the same sum of £30,915.29, and included the same claim in the Particulars of Debt as is set out in paragraph 9 above. The email attaching the statutory demand recorded: "A copy of this document will be forwarded to your bankers [name and address omitted] for their information and or action." The email was signed "Regards Chris White".
Throughout, Mulalley has clearly set out its contest to the debt. First, it says any debt to Crest/Acquisition was not assignable without its consent, which it has never given. Second, some of the amounts that made up the debt had been paid, or were not at that stage due. Third, Mulalley contested Regent's ability to claim the debt on behalf of Crest/Acquisition. Correspondence between Mulalley's solicitors and Mr White has lead to Mr White producing three versions of an Asset Purchase Agreement between "Acquisition 395326821 (formerly Crest Contracting) Limited" and Regent. The first of these to be produced is dated 21 December 2016, the date that Crest changed its name to Acquisition. The second is dated 3 August 2017, which date had not yet passed when it was produced by Mr White and which in any event post-dates the relevant statutory demand the subject of these proceedings. The third is dated 3 August 2016. The three versions of the Asset Purchase Agreement were produced to Mulalley's solicitors in that order and in the case of the 3 August 2017 and 3 August 2016 versions in response to criticisms of the previous version. Other than the date on the front and second pages, the three versions are relevantly identical — for example, the signature pages of each are identical, that is, the same signature page has been used for each agreement. Other than the different dates the only other difference I have been able to find is that the price is redacted in the 21 December 2016 version of the agreement. I say more about this below.
Stating that they were concerned about potential fraud, Mulalley's solicitors have on a number of occasions asked Regent/Mr White in writing to produce for inspection the originals of the three versions of the Asset Purchase Agreement. Regent/Mr White have consistently refused to do so, offering only to produce them before the Court.
Mulalley's solicitors have also been in contact with the Official Receiver, responsible for the affairs of Crest/Acquisition. The Official Receiver has been clear in written communications that Mulalley should not make any payments to Regent of monies due to Crest/Acquisition, because (a) any asset assignment post-dating the presentation of the winding up petition against Crest on 28 September 2016 would be void under section 127 of the Insolvency Act 1986 and (b) in any event a third party has a fixed and floating charge over the assets of Crest/Acquisition. The Official Receiver has also brought its views to the attention of Regent/Mr White.
Mulalley's application to this Court for injunctions was initially listed for hearing on 29 June 2017 before Barling J. At that hearing, Regent and Mr White were represented by counsel and solicitors – counsel's skeleton argument records that she appeared for both Respondents. It has since become apparent that Mr White denies that he was ever represented by counsel or solicitors, and instead claims always to have represented himself. He accepts that Regent was previously represented.
At the hearing on 29 June 2017, on behalf of Regent and on the face of the documents on behalf of Mr White, counsel sought an adjournment of 14 days on the basis of Mr White's ill health. Mr White has inoperable cancer, and at the time was undergoing chemotherapy. Mr White gave undertakings on behalf of both Regent and himself not to take any steps to present a winding up petition against Mulalley until after the disposal of the...
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