Re a Company (1036 of 2023)
| Jurisdiction | England & Wales |
| Judge | Barber |
| Judgment Date | 21 July 2023 |
| Neutral Citation | [2023] EWHC 1779 (Ch) |
| Court | Chancery Division |
| Docket Number | CR 2023 001036 |
[2023] EWHC 1779 (Ch)
ICC JUDGE Barber
CR 2023 001036
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES LIST
IN THE MATTER OF A COMPANY (INJUNCTION TO RESTRAIN PRESENTATION OF A PETITION)
AND IN THE MATTER OF THE INSOLVENCY ACT 1986
Royal Courts of Justice
7 The Rolls Building
Fetter Lane
London
EC4A 1NL
Katherine Hallett (instructed by Fenwick Elliott LLP) for the Applicant
James Barnard (instructed on a Public Access basis) for the Respondent
Hearing date: 2 May 2023
Approved Judgment
This judgment was handed down remotely by email and MS Teams. It will also be sent to The National Archives for publication. The date and time for hand-down is 9.30 a.m. on 21 July 2023
ICC Judge Barber
This is an application to restrain the Respondent from presenting a winding up petition against the Applicant based on sums claimed in a statutory demand dated 30 January 2023 served on the Applicant on 2 February 2023. Interim relief was granted by order of Mr Justice Trower dated 23 February 2023 and continued by consent by Order of ICC Judge Burton dated 9 March 2023 pending the final hearing. On 2 May 2023 I granted a final injunction, with written reasons to follow. This judgment sets out my reasons for that decision. As the hearing was in private to protect the interests of the Applicant, this judgment has been anonymised.
Evidence
I have read the following witness statements and their respective exhibits:
(1) first witness statement of Edward Farren, litigation executive employed by the solicitors for the Applicant, dated 23 February 2023;
(2) second witness statement of Edward Farren dated 6 March 2023;
(3) first witness statement of R, managing director of the Respondent, dated 10 March 2023;
(4) first witness statement of MD, managing director of the Applicant, dated 6 April 2023;
(5) second witness statement of R dated 23 April 2023.
I have also read the other documents contained in a bundle agreed for use at the hearing, to which reference will be made where appropriate.
Background
The Applicant provides electrical services on building projects to a MEPH subcontractor (who is employed by the main contractor). The Respondent is an agency which sources and supplies vetted labourers.
The Applicant and the Respondent worked together on two projects from March to September 2022 (the ‘London Project’ and the ‘Birmingham Project’). These were both projects in which WEL was the MEPH sub-contractor.
The Applicant was able to provide a number of electrically qualified operatives itself but required more for these projects than it had within its own ranks. The Respondent agreed to provide the remaining operatives required.
There is a dispute as to the terms on which it did so. The Applicant's case is that (among other things) the Respondent agreed to:
(1) source labour from their database of electrically qualified persons;
(2) provide defined categories of operative with specific minimum qualifications for each category; and
(3) verify and validate qualifications held by each operative put forward.
The projects did not run smoothly for the Applicant. WEL issued ‘Payless’ notices to the Applicant in July, August and October 2022.
By October 2022, a dispute had arisen between the Applicant and the Respondent. By email dated 6 October 2022, the Respondent demanded payment of certain invoiced sums by 4pm on 7 October 2022 and threatened service of a statutory demand in the event of non-payment.
The Applicant responded by letter dated 6 October 2022, which provided as follows:
‘Further to our recent discussions, and a meeting I attended with the Group Commercial Director of [WEL] on Tuesday afternoon, it has become apparent that there is a dispute on hours which your labour has claimed on the [London Project].
Attached has just been received from our client, WEL, confirming the position put forward in said meeting.
It appears that WEL have conducted an exercise to determine labour attendances and works undertaken on site for the duration of project and continue to investigate these matters as detailed.
WEL have identified that there is a conflict between the hours that have been claimed by your operatives and the site information based against the WEL facial scanner, WEL labour sheets and Main contractors signing in sheet.
As such our account is being reviewed and valued considerably less at this stage than expected due to the operatives not fulfilling their obligations.
It is of grave concern that we read comments such as “misrepresentation” from our Client, a position which leaves us with no other option than to embark on our investigation as to what has gone on with the hours presented by labour on the Project, of which [the Respondent] provided a large amount.
Having commenced this immediately after the meeting, which is still very much work in progress, we have already discovered discrepancies in the hours put forward in invoices for which your recent letter and statement relate.
As such and without prejudice to our rights on this matter, we confirmed that the invoices as amended in your statement are in dispute.
Whilst we will be working through this expediently, focusing on the current invoices as listed in your statement, we are sure you can appreciate this exercise will also be extended to retrospective invoices and payments to ensure no overpayments have occurred in the past.
With regards to timescales we intend to complete our audit of hours and invoices on your statement by 21 October 2022 and will issue these to you at that point for the Parties to meet to discuss.
Our review and timescales of matters will be distinct and separate to those WEL have set out, however, clearly the two may need to merge at a point as we move towards a resolution.
For clarity and good order we confirmed that [the Applicant] remains committed to releasing sums for payment as they fall due should they move out of the disputed status they are currently in a set out above…’
Enclosed with the Applicant's letter to the Respondent dated 6 October 2022 was a letter dated 6 October 2022 from WEL to the Applicant, which provided as follows:
‘Further to our meeting on Tuesday, 4 October 2022 at the offices of [the Applicant's solicitors]… we write as follows:
As set out in the meeting … WEL have undertaken and continue to do so, an audit of site sign-in records on the [London] Project.
As demonstrated in our meeting such exercise up to the 1 June 2022 presents a position where it is clear hours that you have put forward for the labour deployed are not representative of the actual hours spent on site and/or the works undertaken …’
WEL's letter of 6 October 2022 then summarised discrepancies and adjustments totalling £289,026.75, including adjustments required in respect of 180 man days of snagging works. The letter continued:
‘Given the magnitude of these discrepancies I am sure you can appreciate that your account on [the London Project] will now be under my review, during which time, and considering the paid to date against the above sums, it is unlikely that any further payments will be due to [the Applicant] for works undertaken now, in the past or future until such time as we have collectively resolved what has happened with this misrepresentation.’
The Respondent was unmoved by the Applicant's letter of 6 October 2022 and its enclosure. By subsequent email the Respondent observed:
‘You will appreciate that all our invoices are supported with detailed timesheets, these invoices were created on the back of the timesheets you sent to us stating what you had approved for the week and accordingly there is no reason that those that are now due and owing should not be paid’.
By letter dated 10 October 2022, the Applicant responded as follows:
‘To be clear, we confirm your timesheets at the time of issue each week were approved based on information we are party to at the time. We did not have [sight] of the weeks signing in sheet from Red [the main contractor] or [WEL] at [the London Project]. As previously advised, it is each individual's responsibility and obligation to sign in and out each day….
Both Red construction and [WEL] have now agreed to issue us full copies of both contractors attendance sheets which we are collecting this week. These were not available before but we have insisted these are transferred to us to justify the claims of shortfall in payments on our account. At this time [WEL] have shown us samples on the [London] site given several of your operatives not complying with these rules based simply on the internal sheets which has resulted in a suspension of payments on our account until detailed reviews can be completed. We have disputed the claims and the amounts being identified across the project (£201k) but at this time do not have the information to review ourselves to conduct an accurate review….
If you do pursue your submission of a statutory demand, we will instruct our solicitors to submit to the court an injunction against [the Respondent] in the matter, as we have identified the monies to be in dispute given the difference in value of our accounts directly which may be considered fraudulent. We note and identify that due to the values being deducted from our account being a direct relation to the personnel provided by [the Respondent] we will be suspending any payments owed to [the Respondent] until this matter can be resolved and a true value of the account be identified.’
The Respondent did not reply to the letter of 10 October 2022. On 7 November 2022, the Applicant chased for a response. No response was received.
The Statutory Demand
By January 2023, the parties had not resolved their differences. The Respondent made one attempt to serve a statutory...
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