Officeserve Technologies Ltd (in Compulsory Liquidation) v Annabel's (Berkeley Square) Ltd

JurisdictionEngland & Wales
JudgeHHJ,Paul Matthews
Judgment Date15 August 2018
Neutral Citation[2018] EWHC 2168 (Ch)
CourtChancery Division
Docket NumberCase No: No 11 of 2018
Date15 August 2018
Between:
(1) Officeserve Technologies Limited (in Compulsory Liquidation)
(2) Paul David Wood and Simon Robert Haskew (as Joint Liquidators of Officeserve Technologies Limited)
Applicants
and
(1) Annabel's (Berkeley Square) Ltd
(2) Apple Retail UK Ltd
(3) Your PC Ltd t/a Aquilatec
(4) British Business Influence Ltd
(5) Prime Hotels (UK) Ltd t/a Bulgari Hotel
(6) Bupa Insurance Ltd
(7) Cartridge Save Ltd
(8) China & Co (Props Hire) Ltd
(9) Clapham Studios Ltd
(10) Courier Express Refrigerated Transport Ltd
(11) Coya (Restaurant) Ltd
(12) Dashle Ltd
(13) Database For Business Ltd t/a DBFB Communications
(14) Digitek Resourcing Ltd
(15) Elleven Orthodontics Ltd
(16) Fasthosts Internet Ltd
(17) FluidOne Ltd
(18) Gemini Capital Consulting Ltd
(19) George (Mount Street) Ltd
(20) Global PA Associates Ltd
(21) Hat-Trick Design Consultants (London) Ltd
(22) Hedonism Drinks Ltd
(23) Inteam Ltd
(24) Intellectual Property Office
(25) James Pimental Pinto
(26) Lawson Conner Services Ltd
(27) Lombard North Central Plc
(28) Luminescent Digital FZ LLE
(29) Martin Stockman
(30) Michele Ferriday t/a Michele Ferriday Flowers
(31) Monique Jayasuriya
(32) Telefonica UK Ltd t/a O2
(33) Park Chinois Ltd
(34) Please Hold (UK) Ltd
(35) Playtype Foundry APS
(36) Downtown Promotions Ltd t/a Project Club London
(37) Ring Central UK Ltd
(38) Salesforce.com Emea Ltd
(39) SmartBear (Ireland) Ltd
(40) Subzero (2003) Ltd
(41) Dorchester Clubs Ltd t/a the PA Club
(42) Coney Island Ltd t/a Tramp
(43) Zurich Insurance Plc
Respondents

[2018] EWHC 2168 (Ch)

Before:

HHJ Paul Matthews (sitting as a Judge of the High Court)

Case No: No 11 of 2018

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS IN BRISTOL

INSOLVENCY AND COMPANIES LIST (ChD)

Bristol Civil Justice Centre

2 Redcliff Street, Bristol, BS1 6GR

Simon Passfield (instructed by Veale Wasbrough Vizards) for the Applicants The Respondents did not attend and were not represented

Hearing dates: 1, 5 June, 8 August 2018

Judgment Approved

Paul Matthews HHJ

Introduction

1

This is my judgment on an application, made by notice dated 24 November 2017, by Officeserve Technologies Ltd (“the Company”), acting by its joint liquidators. The Company entered compulsory liquidation on 22 February 2017, on the basis of a petition presented on 26 October 2016. The 43 respondents are alleged to have received payments totalling £205,932.90 from the assets of the Company between those two dates, and it is therefore said that, in accordance with section 127 of the Insolvency Act 1986, those payments are void and must be returned to the Company.

2

Last year, I heard and disposed of certain preliminary issues in an application brought by the joint liquidators against Mr Cecil Anthony-Mike, the former executive chairman and director of the Company. I said this by way of introduction about the Company itself:

“8. The Company was incorporated in 2011. The respondent became sole shareholder and director in 2013. It aspired “to disrupt and enter the £15.9 billion lunch at work market, using technology and a national delivery network”. It grew rapidly, from a handful of employees at the outset to 200 employees and a market value estimated at £40 million before it crashed. The respondent was originally the 100% shareholder. But between 2015 and 2016 outside investors were brought in, so that by the time of the crash the respondent held only 80% of the equity.”

3

In the course of my judgment on those preliminary issues, I said this:

“2. The application [against Mr Anthony-Mike] is made in the context of winding up proceedings against the Company. The petition to wind up the Company was first presented to the High Court, Chancery Division, Bristol District Registry, on 26 October 2016. It was based on a statutory demand that had been served on 3 October 2016. I interpose here to say that, before the petition could be dealt with, the respondent was ousted as a director and executive chairman of the Company, on 20 December 2016. On 23 December 2016 an agreement (called a ‘settlement agreement’) was entered into between the Company and the respondent, governing certain claims or potential claims by each against the other. I shall return to these events in more detail.

3. Returning to the proceedings concerning the Company, on 8 February 2017 HH Judge Purle QC, in the Birmingham District Registry of the Chancery Division, heard an application for an administration order in relation to this company. He dismissed that application, ordered that the petition to wind up the Company be transferred to Birmingham District Registry and also appointed Mr Haskew and Mr Wood (now the liquidators) as the joint provisional liquidators of the Company. On 22 February 2017 the judge made a winding up order.

4. There then followed proceedings within the winding up. First, a without notice freezing injunction was granted against the respondent, on 20 March 2017, by Mr Justice Newey. Then on 31 March 2017 an on-notice freezing injunction was granted, limited to assets to the value of £535,477.31. I varied that freezing injunction very slightly on 21 April 2017.

5. On 25 April 2017 I made an order by consent that certain preliminary issues should be determined in this application before the application itself was dealt with. The preliminary issues as set out in the order are as follows:

“1. Whether section 127 of the Insolvency Act 1986 has rendered the entire settlement agreement dated 23 December 2016 void;

2. If and to the extent it is held that section 127 Insolvency Act 1986 has rendered the settlement agreement void, whether the settlement agreement should be validated by the court;

3. Whether all or any of the claims brought by the applicants against the respondent are barred pursuant to the terms of the settlement agreement;

4. If some, but not all the claims brought by the applicants against the respondent are so barred, which ones are so barred.”

6. These issues arose out of the “settlement agreement” dated 23 December 2016 between the Company and the respondent, which might govern the claims made in the application. Put briefly, the respondent's case is that that agreement on its true construction bars all the claims. The Company says that it does not, but that in any event section 127 of the Insolvency Act 1986 renders the agreement void. The respondent says that in that case the court should validate the agreement as being in the interests of the Company's creditors…”

4

In my judgment, I held that, on its true construction, the claims brought by the Company against Mr Anthony Mike were not barred by the terms of the settlement agreement, but if they were, then the settlement agreement was avoided by the operation of section 127 of the Insolvency Act 1986, and that if it were it would not be right for the court to validate it under that section. My judgment was the subject of an appeal to the Court of Appeal, but before that appeal was heard the claim against Mr Anthony-Mike and the other directors of the Company was subject to a successful mediation, leading to a compromise of all claims by the Company against them. I will have to return to the effect of this later.

Procedure

5

This application was begun by an application notice issued on 24 November 2017 against the 43 separate respondents. It was supported by the third witness statement of Paul David Wood, dated 24 November 2017 (the first two witness statements having been made in support of the separate claim against Mr Anthony-Mike), the first, second and third witness statements of Nicholas Martindale, the first two dated 6 April 2018 and the third dated 29 May 2018 and the witness statement by Edward John Husband dated 4 June 2018. Very recently, I received the further witness statement of Mr Wood (his fourth), dated 27 July 2018, as described below.

6

The application was originally listed to be heard on 13 April 2018, but on 6 April 2018 the applicants applied for an adjournment of that hearing because of the successful mediation of the parallel dispute between the Company and Mr Anthony-Mike and other directors and senior employees of the Company. It was considered that this would be likely to lead to the resolution of a large number of the claims made in the present application. I acceded to the application for an adjournment, and the hearing was refixed for 1 June 2018.

7

The settlement of the dispute with Mr Anthony-Mike and others did indeed lead to a resolution of some of the disputes in the present claim. By the time of the skeleton argument prepared on 29 May 2018 for the hearing on 1 June 2018, the application was pursued only against 19 of the 43 respondents named in the original application notice. These were respondents nos 1, 2, 6, 11, 12, 15, 18, 19–22, 25, 26, 29, 31, 34, 36, 38, and 41. By the time of the hearing itself (at which no respondent was present or represented), a settlement had been reached with respondent no 20, and the applicants had discovered that respondents nos 18 and 36 were companies which had recently been dissolved, and therefore were no longer pursued.

8

At the hearing on 1 June 2018 I was concerned in particular with two matters which did not seem to me at that stage to have been sufficiently addressed. The first was the effect (if any) of the settlement of claims for breach of fiduciary duty against Mr Anthony-Mike and the other directors on the claims against the third party recipients who were respondents to the present application. The question was whether, if the Company has settled for value with those who caused the payments to be made, the rule against double recovery, or any similar rule, reduced or even prevented a claim being made against the recipients of those payments. Secondly, in relation to respondent no 31, Monique Jayasuriya, who specifically raised the point (but indeed any other respondent to whom it might also apply),...

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