Re Supporting Link Ltd (Practice Note)
| Jurisdiction | England & Wales |
| Judge | The Vice-Chancellor |
| Judgment Date | 19 March 2004 |
| Neutral Citation | [2004] EWHC 523 (Ch) |
| Docket Number | Case No: 7471 of 2003 |
| Court | Chancery Division |
| Date | 19 March 2004 |
[2004] EWHC 523 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
The Vice-Chancellor
Case No: 7471 of 2003
Mr. Robert Hildyard QC and Miss Sarah Harman (instructed by the Treasury Solicitor) for the Claimant
Mr. Anthony Elleray QC (instructed by Messrs Paul Ross & Co) for the Defendant
Hearing dates : 3RD – 8TH March 2004
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
On 17th March 2003, pursuant to the powers conferred on him by s.447 Companies Act 1985, the Secretary of State for Trade and Industry authorised two of his officers, David Eric Usher ("Mr Usher") and Claire Mary Bernadette Entwistle ("Ms Entwistle"), to require Supporting Link Alliance Ltd ("the Company") to produce to them forthwith any documents they might specify. From the information and documents obtained by them it appeared to the Secretary of State to be expedient in the public interest that the Company should be wound up. Accordingly a petition was presented to the Court for that purpose on 25th November 2003. An application for the appointment of a provisional liquidator was disposed of on the basis of undertakings given to the Court by the Company and its principal director Mr Anthony Simister ("Mr Simister") on 15th December 2003. I am now asked to accept the same or similar undertakings and, on that basis, to dismiss the petition.
Mr Simister and his co-director Ms Selby incorporated the Company in September 2000 to carry on business as a general commercial company. They were then only 20. Mr Simister had had previous experience working in a warehouse and as a sales representative. Ms Selby did not give evidence and I do not know what, if any, previous experience she had had. The Company carried on business in and from offices in Manchester. It employed 'telesalespersons' who, by means of unsolicited telephone calls, sold advertising space in publications to be subsequently produced and distributed by the Company. I shall refer to the way in which the Company carried on its business in greater detail later. For present purposes it is sufficient to record that the 'sales pitch' included representations that the Company made regular donations to children's charities and that the publication would be distributed in the 'regional' or 'surrounding' area of the advertiser's business.
The first publication was a wallplanner. This is a calendar running from Monday 1st April 2002 to Monday 31st March 200The document measures approximately 23 x 16.5 inches. A central rectangle measuring approximately 16 x 7 inches contains the calendar printed over two right hands connected in a handshake and surrounded by the Company's name, Supporting Link Alliance Ltd. Most of the rest of the document is taken up with advertisements for a variety of businesses. There were about 30 variations to cover the different regions in which the advertisers carried on business.
The second publication was entitled 'The Annual Business Guide'. It is a booklet in A5 size. Below the title is added the description 'for employers of small to medium size businesses'. At the foot of the front cover is the year '2003'. The cover, front and back, is on stiff card and was printed separately from the remaining pages. Inside the front cover is an advertisement for Harrods and a list of those, including contributors, responsible for the publication. In small print at the foot of the page is a copyright notice followed by a disclaimer of liability in respect both of advertising and editorial content. The outside back cover bears the logos of 20 Charities under the heading 'Here are just a few of the many charities that have benefited from the production of The Annual Business Guide 2003'. The contents list on page 3 describes them as "Supporting Link's Nominated Charities". The inside back cover bears what are described as help and advice line numbers provided by the Inland Revenue; in addition it indicates that it is page 35. Accordingly pages 3 to 34 had to be provided to complete the publication. Those pages contain editorial content dealing with such matters as the Budget 2002, Inheritance Tax, National Minimum Wage, employment law, Health and Safety in the workplace, safety signs and regulations, charitable giving through the payroll and tax relief on computer purchases. There were 13 regional editions. The editorial content was the same for all but the advertisers differed. The number of advertisements varied from 200 to 250 advertisements each. 5,000 copies of each variation were printed at a unit cost of about 11.5p plus VAT.
The third publication was an Annual Business Guide for 2004. This was published after the presentation of the petition. It follows closely the format used for the Guide for 2003 but the outside back cover bears commercial advertisements as opposed to the logos of charities, the editorial content is different and the advertisements are not the same though some customers did repeat advertisements. It has been distributed. The Guide for both 2003 and 2004 is printed on good quality stiffish paper. Each guide weighs about 100 grams.
The business of the Company was successful. The abbreviated financial statements for the period from 12th September 2000 to 31st December 2001 prepared by a firm of chartered accountants record the following:
The expenses include £63,000 in respect of directors' remuneration and £1,700 as donations to charity.
Those for the year ended 31st December 2003 record:
Included in expenses are £403,601 for wages and salaries, there being no separate figure for directors' remuneration, and £5,550 as donations to charity.
| Turnover | £240,255 |
| Expenses | £205,360 |
| Operating Profit | £34,895 |
| Dividend | £2,150 |
| Net current assets | £21,197 |
| Fixed assets | £5,111 |
| Retained profit | £26,307 |
| Turnover | £482,026 |
| Expenses | £483,258 |
| Operating loss | (£1,232) |
| Fixed Assets | £7,236 |
| Net current assets | £17,978 |
| P/L Account | £25,223 |
In the light of these and other figures obtained by Mr Usher, the Secretary of State accepts that the Company is and always has been solvent. It is not suggested that the Company has failed to keep proper books of account. Accordingly there has been no examination of the accounts to ascertain the extent to which the figures for 2002 might have been inflated by the inclusion of income for the wallplanner but not all the corresponding expenses, whilst those for 2003 might have been depressed by the inclusion of expenses in relation to the wallplanner without the associated income.
But the Company was attracting a certain amount of adverse comment. In and after November 2002 the Trading Standards Service of the Department of Enterprise Trade and Investment of Northern Ireland received a number of complaints from members of the public in relation to the wallplanner for Northern Ireland and the Guide for 2003. The complaints were investigated but the Chief Trading Standards Officer for Northern Ireland concluded that a prosecution under the Trade Descriptions Act 1968 was unlikely to succeed. Mr Simister was so informed by letter dated 21st February 2003.
In January 2003 the Company received complaints from solicitors acting for one of its competitors Barrington House Publishing Co. Ltd ("Barrington House") alleging passing off, fraud and breach of the law relating to charities. In the following month the Company obtained copies of mailshots from Barrington House and another of its competitors, McKenzie Campbell Publishing Ltd, addressed to their customers. The letters warned addressees that a number of unscrupulous businesses were defrauding some of their customers; five companies were named including the Company.
On 13th March 2003 the Company changed its name by omitting the word "Alliance". As I have indicated Mr Usher and Ms Entwistle were appointed four days later and commenced their investigations. They attended the offices of the Company on 18th March. Mr Simister provided information and documents then and subsequently when he attended the offices of the DTI in Manchester on 20th March. On 18th June 2003 Mr Simister, accompanied by his solicitor Mr Paul Ross, saw Mr Usher at the DTI's offices. Mr Simister provided further information to Mr Usher at a meeting in the DTI's offices on 3rd July and supplied more documents on 10th and 16th July. There was a telephone call from Mr Simister to Mr Usher on 23rd July. This completed what might be described as the first phase of the investigation.
At an early stage of the investigation by Mr Usher and Ms Entwistle, namely on 8th May 2003, the Trading Standards Service of Northern Ireland published a news release entitled "Publishing scam rips off charities and business." The news release stated that "one of those involved in this scam [is]…Supporting Link Alliance Ltd". There followed a statement from Mr McMurdo, a trading standards officer, describing the nature of the scam. Mr Simister thought that Mr Usher was responsible for the news release and rang him on 20th May to complain of the breach of the confidentiality. Mr Usher pointed out that though the initials were similar the Department of Enterprise, Trade and Investment of Northern Ireland was a different department to the DTI in England. In consequence, but not until after the decision to present a petition for the winding up of the Company had been taken, Mr Usher obtained from Northern Ireland details of the complaints they had investigated and from Trading Standards Officers in England similar complaints made...
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