Re Piccadilly Property Management Ltd
| Jurisdiction | England & Wales |
| Judge | MR. JUSTICE FERRIS |
| Judgment Date | 10 June 1998 |
| Judgment citation (vLex) | [1998] EWHC J0610-2 |
| Court | Queen's Bench Division (Administrative Court) |
| Docket Number | CH. 001809 of 1998 |
| Date | 10 June 1998 |
[1998] EWHC J0610-2
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT
Royal Courts of Justice
Mr. Justice Ferris
CH. 001809 of 1998
MR. B. WEATHERILL, Q.C. and MR. R. CROSS (instructed by Messrs. Robin Wayne & Associates) appeared on behalf of the First Applicant.
MR. VAN TONDER (instructed by Messrs. Canter Jules) appeared on behalf of the Second and Third Applicants.
MISS R. STUBBS (instructed by the Legal Department, Inland Revenue) appeared on behalf of the First Respondent.
MR. BUCHAN (Official Receiver) appeared on behalf of the Second and Third Respondents.
MR. P. MITCHELL (instructed by the Legal Department, Westminster City Council) appeared on behalf of the Fourth Respondent.
(As approved by the Judge)
I have before me two applications relating to a company named Piccadilly Property Management Limited ("the Company") . The Company is a member of the Dollar Land Group, and is a wholly owned subsidiary of Dollar Land Holdings plc.
The applications which are before me are consequential upon a petition for the winding up of the Company which was presented by the Commissioners of Inland Revenue on 25th March 1998, based upon indebtedness consisting of unpaid income tax and PAYE tax amounting altogether to, in rough figures, something like £110,000. That petition came before the court first on 6th May this year, at which stage it had not been advertised. It was then adjourned for 14 days so that advertisement could take place. When it came back before Mr. Registrar Buckley on 20th May the Company tendered some very recently sworn evidence which it wished to rely upon in opposition to the petition. It is said that Mr. Registrar Buckley declined to have regard to that evidence. Whether that is so or not is not something which I propose to go into today. The fact of the matter is that Mr. Registrar Buckley made an order for the winding up of the Company on 20th May.
On 26th May, which was the Tuesday after the Bank Holiday Monday, the Company applied to Neuberger J. (who was the vacation Judge) for an order staying the winding up proceedings. I understand that informal notice of the intention to make that application was given to the Official Receiver (as the liquidator under the winding up order) on the Friday evening before the application was made. No notice of any kind was served upon the Commissioners of Inland Revenue, the petitioners. That seems to me to have been a serious procedural irregularity. It seems to me to be axiomatic that on an application to stay winding up proceedings the petitioning creditor must, at the very least, be given the opportunity to be present at the hearing of the application to stay. That opportunity was not afforded in this case. Many judges would, I think, have rejected the application out of hand, or at any rate declined to consider it unless and until notice had been given to the petitioning creditor and an opportunity for the petitioning creditor to be heard had been afforded.
For reasons which are not apparent to me, and which I do not criticise, Neuberger J. did not think it appropriate to take that course and he granted a stay of the winding up proceedings pending the appeal which the Company either intended to make or had by then initiated against the winding up order. He gave the Commissioners of Inland Revenue leave to apply to discharge the stay and the first of the applications which is before me is an application made by the Commissioners for such a discharge made pursuant to that leave.
There is another application which is before me, and that is one which is made by Dollar Land Holdings plc, the holding company of the Company, and a company named Hatco Limited for an order that notwithstanding the winding up order the directors of the Company may act for the Company in the preparation and the proposal of a second company voluntary arrangement to the creditors pending the hearing of the Company's appeal and its application to rescind the winding up order. I should explain that the reason why that application refers to a second company voluntary arrangement is that there was a previous voluntary arrangement approved by the creditors of the Company in 1996. That voluntary arrangement depended for its success on the introduction of substantial funds from outside sources. No such funds were ever introduced and accordingly that voluntary arrangement failed altogether,
no payments having been made to creditors under it.
The arrangement was to operate for a limited time and that limited time ceased without any such payments being made.
In addition to the two applications which are before me, there is a third application, namely the Company's appeal from the winding up order. It is relevant to note that that appeal has two limbs. The first limb is a straightforward appeal from the winding up order, presumably on the basis that the winding up order should never have been made. The second limb is an application to vary or rescind that order made under rule 7.47 of the Insolvency Rules, under which somewhat different considerations will apply. That appeal and application for recision is not yet ready for hearing. Earlier this week I gave directions intended to lead to an early hearing and it is hoped (but there can be no guarantee) that it will be possible to bring that appeal on for hearing by about the middle of July. There must, however, be a risk that for one reason or another that will not be achieved and that the matter will go off for a more extensive period of time.
As to the affairs of the Company, I have no intention of trying to set out any elaborate summary. To my mind the material facts are as follows. First, the petition debt or debts are not disputed. There is no argument that the Revenue is not entitled to recover the amounts of unpaid income tax and National Insurance contributions which remain outstanding and the indebtedness in respect of which is the subject matter of the petition. Indeed now that the first voluntary arrangement has ceased to operate, the Revenue is in a position to rely upon its full debt, including that which was originally caught by the first voluntary arrangement, and it seems that the total sum due to the Revenue is of the order of £370,000, a very substantial sum.
Secondly, there is no dispute that the Company is heavily insolvent. On the statement of affairs put forward by the Company itself, its insolvency amounts to some £11.5 million. Strangely, it seems that that figure may be challenged not by the Company but by the Inland Revenue as being excessive on the ground that it takes into account what is described as a "guarantee debt" for something in excess of £10 million, which may not truly be owing or may not amount to that sum. But it is the Company's own case that it is insolvent to the tune of some £11.5 million.
Thirdly, there is the fact, which I have already mentioned, that the application for a stay of the winding up proceedings has never yet been considered inter parties.
On behalf of the Company, Mr. Weatherill suggested (at least at one stage of his submissions) that, a stay having been granted, there was some burden upon the Inland Revenue to show that it should be lifted. I do not see it that way at all. As I have said, the reason why the stay was granted without
an inter parties hearing is attributable to a procedural irregularity for which the Company was responsible. Now that the matter is for the first time before the court today on an inter partes basis, I feel it my duty to consider the matter anew and to take full account of what the Revenue have said and to consider what ought to be done.
Next, I must consider the principles which are
applicable to applications of this kind. The authorities
show emphatically that the court has to be satisfied that there ought to be a stay and that if the court is in doubt
as to whether to grant a stay or not, it should refuse it. The case which is always cited in this context is the case
of In re A. & B.C. Chewing Gum Ltd. [1975] 1 W.L.R. 579, but
Mr. Weatherill submitted that that case, although a decision made only some 23 or 25 years ago, relates to an earlier age when the procedure was different and appeals took longer to be heard. I am not fully satisfied by that but I will leave it on one side. I am content to refer to the current practice as stated by Harman J. in the case of Re Lowston Ltd. [1991] B.C.L.C. 570. In that case Harman J. said, at p.572:
"In my view, the test I have to apply is still that laid down by the first Buckley J. in Re Telescriptor Syndicate Ltd. [1903] 2 Ch. 174 that the court has to be satisfied that it is right to stay the winding-up proceedings, and if there be matters as to which the court has doubts, it should not so stay.
"Megarry J. was of the same view in Re Calgary and Edmonton Land Co. Ltd. [1975] 1 All E.R. 1046, [1975] 1 W.L.R. 355. I have to be satisfied that it is proper to allow this company with this history to re-emerge back as an unencumbered company able to trade and carry on business."
Then he deals with the fact that that case involved an applicant with a disputed debt, and on the next page he says:
"The winding-up order was made upon a basis which has proved to have been false, i.e. that there was a judgment debt against the company, and the debt itself is plainly, when one examines it and as the master and the Queen's Bench held, one which is open to severe question. It may turn out to be correct but that will require substantial litigation, which is not proceeding with any speed or diligence....
To continue reading
Request your trial