Re Millennium Advanced Technology Ltd
| Jurisdiction | England & Wales |
| Judgment Date | 02 April 2004 |
| Neutral Citation | [2004] EWHC 711 (Ch) |
| Docket Number | Claim No 6534 of 2003 |
| Court | Chancery Division |
| Date | 02 April 2004 |
[2004] EWHC 711 (Ch)
M. Briggs QC
Claim No 6534 of 2003
IN THE HIGH COURT OF JUSTICE
COMPANIES COURT
Mr Ashley Underwood QC (instructed by Edwin Coe of 2 Stone Buildings, Lincoln's Inn, London WC2A 3TH) appeared for the petitioner
APPROVED JUDGMENT
The Company was represented by its director Abu Ahmed
I have before me a creditor's petition by the Mayor and Burgesses of the London Borough of Tower Hamlets ("Tower Hamlets") for the winding up of Millennium Advanced Technology Limited ("MATT"). Notices of intention to support the petition were given by the Mayor and Commonalty and Citizens of the City of London, and by Greenwich Council, both also claiming to be creditors, but neither appeared or was represented at the hearing.
The petition is unusual in a number of respects. First, Tower Hamlets seeks to have MATT wound up on the just and equitable ground under section 122(1)(g) of the Insolvency Act 1986 rather than on the ground that the company is unable to pay its debts, pursuant to section 122(1)(f). Secondly, it is apparent both from the terms of the petition and from the manner in which the case was originally presented, both orally and in his skeleton argument, by Mr. Ashley Underwood QC on behalf of Tower Hamlets, that the petitioner's principal reason for petitioning appears to have been a perception on its part that it was in the public interest that MATT should be wound up, rather than in the private interest of the petitioner as a creditor.
Although MATT had the benefit of solicitors on the record for most of the period between the presentation of the petition in October 2003 and its hearing, its funding for legal purposes having now run out, it sought to be represented at the hearing by one of its directors, a Mr. Abu Ahmed. Since he had unexpectedly been taken ill and admitted to hospital on 22 nd March, the day before this matter was listed for hearing, and in order to give the petitioner time to consider and if thought fit make submissions on the legal implications arising from the unusual nature of the petition, I directed that it should be adjourned for a day's hearing on 25 th March. Happily, Mr. Ahmed had by then recovered to an extent sufficient for him to attend court. He appeared nonetheless to be in some continuing discomfort and, at his request, in addition to permitting him to represent MATT, I also took the exceptional course of allowing the office manager of the company, a Mr. Mithra Dulloo, to assist Mr. Ahmed with the task of making oral submissions. They had already jointly prepared some concise and useful written submissions, supported by a file of documents, which, with Mr. Underwood's consent, I admitted as additional evidence. Mr. Ahmed and Mr. Dulloo both spoke concisely and with good sense in amplification of their written submissions.
It was apparent from MATT's written submissions, and confirmed by Mr. Ahmed at the beginning of the hearing, that the company's stance towards the matter may be summarised as follows. First, it was submitted that the petition should be struck out or dismissed, essentially on the grounds that Tower Hamlets' alleged debt was disputed. Alternatively, Mr. Ahmed applied for an adjournment of the petition, not in order to put in further evidence, but to provide time during which an application might be made for an Administration Order, in preference to an immediate winding up. Finally, Mr. Ahmed submitted that if neither of those courses were followed, neither MATT nor he personally (having already committed substantial personal resources of his own to the defence of the petition) had either the financial resources or the legal ability to mount any continued defence of the petition on its merits. Although at times their oral submissions understandably verged into the arena of pure evidence, neither Mr. Ahmed nor Mr. Dulloo sought to give evidence as witnesses themselves, by way of addition to the evidence already lodged on MATT's behalf in January of this year.
Having heard argument, I rejected MATT's application to have the petition struck out or dismissed, and I also rejected its application for an adjournment. In view of the time, I indicated that I would give my reasons for those decisions after the conclusion of the proceedings, and then heard the substance of the petition. This judgment is therefore not only a judgment on the petition itself, but also upon the two applications of MATT which immediately preceded its hearing.
History of the Company
MATT was incorporated on 23 rd February 1999 for the purpose of providing technology training for under-privileged persons with the aid of regeneration grant monies. It either was originally or at least became the intention of its management that it should operate on a non-profit making basis. In its first audited accounts for the period ended 30 th June 2000 its principal activity was described as having since incorporation been the provision of information technology training to socially excluded groups on a non-profit making basis. Its original promoters were Mr. Ahmed and a Dr. Nurun Nabi. Mr. Ahmed became its chief executive and Mr. Nabi its secretary.
Tower Hamlets was the principal but not the only provider of grants for the purpose of funding MATT's activities. Other funders included the supporting creditors to whom I have already referred, and Hackney Borough Council. Its total grant income since incorporation has been approximately £1.2 million, of which sum £700,000 odd has been provided by Tower Hamlets. By early 2003 it was operating from premises in Whitechapel Road, Bethnal Green Training Centre, Fordham Street and Greatorex Street. Unaudited financial statements prepared for the company by Hill Wooldridge & Co. for the year ended 30 th June 2002 suggest that its income was by then £775,548 having been £430,683 for the previous year.
It is apparent from copy correspondence and other material submitted on MATT's behalf that by the end of 2002 the company had become well regarded in certain quarters for the quality of its activities, and had become a successful competitor for local authority and related funding. On 13 th January 2003 however the chief executive of Tower Hamlets, Christine Gilbert, wrote to Mr. Ahmed giving notice that a complaint had been received "regarding a number of financial transactions associated with grant funded expenditure to" … MATT, inviting the company to co-operate in a report by accountants engaged for that purpose by Tower Hamlets, namely Robson Rhodes, and stating that as a precautionary measure, all funding to MATT by Tower Hamlets would be suspended.
Robson Rhodes had by then already submitted a preliminary report to Tower Hamlets in December 2002. A further report was submitted in January 2003, and a composite report in May 2003. This third report constituted Tower Hamlets' evidence in support of the petition, and I shall refer to it as "the Robson Rhodes report".
It appears that the Public Sector Fraud Team of the Metropolitan Police ("the fraud squad") must have commenced an investigation into the same or related matters at much the same time, because at the beginning of March 2003 they searched both MATT's and Mr. Ahmed's premises and took away substantial quantities of MATT's records. Mr. Ahmed was himself interviewed by the fraud squad in July 2003, and that investigation is, I was informed, still ongoing but no charges have so far been brought.
The combined effect of the suspension of funding and the presentation and advertisement of the petition caused MATT to have to cease its training activities by the end of 2003. In his written submissions, Mr. Ahmed stated that he regards MATT as being owed approximately £476,000 odd (of which he says that £218,000 odd is due from the petitioner) by way of suspended funding arrears due by reference to expenditure already incurred. Against that, he states that the company owes some £426,000 odd to creditors. It has £10,000 odd in accounts frozen as a result of these proceedings. It owns computer equipment and office equipment and furniture, and Mr. Ahmed regards it as being contingently entitled to income of another £475,000 odd if its activities could be resumed and current contracts completed satisfactorily.
The terms upon which Tower Hamlets made grant funding available to MATT at least from August 2001 appear from Appendix B to a letter of offer to Mr. Ahmed countersigned by him on 20 th August 2001, in which MATT is described as the Project Sponsor and the training purposes for which the grant was made as "the Project". Appendix B is in the form of standard conditions of grant, and the following conditions are material.
By Condition 3.3, MATT was obliged to maintain written records of every item of expenditure in relation to the Project, to include dates of the incurring of the expenditure, prices paid, payees, description of goods and/or services received and copy receipts and invoices in respect of such good or services.
Condition 10 required orders for work, goods or services to be the subject of competitive tendering or quotation, of varying degrees of sophistication dependent upon the amounts involved.
Condition 12 provided for grants to be payable following submission by MATT to Tower Hamlets (described as "the Accountable Body") of relevant information about its expenditure, on a quarterly basis. By Condition 12.3 Tower Hamlets reserved the right to reduce, suspend or withdraw any payment of grant if MATT was in breach of any of the conditions.
Finally, Condition 13 provided that if (inter alia):
"The Project Sponsor is in breach of any of the conditions attaching to the Grant then the Project Sponsor shall make repayment of any part of the Grant as required in the Notice...
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