Stacks Living Limited & Ors v Balvinder Shergill & Anor
| Judge | INSOLVENCY AND COMPANIES COURT JUDGE GREENWOOD |
| Judgment Date | 03 January 2025 |
| Neutral Citation | [2025] EWHC 9 (Ch) |
| Counsel | Mr James Fagan |
| Date | 03 January 2025 |
| Year | 2025 |
| Court | Chancery Division |
Neutral Citation Number: [2025] EWHC 9 (Ch)
Case No: CR-2018-003933 and CR-2018-009326
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES LIST (ChD)
IN THE MATTER OF STACKS LIVING LIMITED (In Liquidation)
AND IN THE MATTER OF STAFFS FURNISHING LIMITED (In Liquidation)
AND IN THE MATTER OF THE INSOLVENCY ACT 1986
Rolls Building
Royal Courts of Justice
7 Rolls Buildings
London EC4A 1NL
Date: 3 January 2025
Before:
INSOLVENCY AND COMPANIES COURT JUDGE GREENWOOD
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Between:
1.STACKS LIVING LIMITED
2.STAFFS FURNISHING LIMITED
3.MUSTAFA HASSANALI ABDULALI and
NEIL JAMES DINGLEY (in their capacity as
the Joint Liquidators of the 1st and 2nd
Applicants)
Applicants
- and -
1.BALVINDER SHERGILL
2.MIRANDA ALLISON SMITH
Respondents
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Mr James Fagan (instructed by Howes Percival Solicitors) for the Applicants
Mr Christopher McGeever (instructed by Smith & Wells Solicitors) for the Respondents
Hearing dates 8, 9 and 10 October 2024
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JUDGMENT
This judgment was handed down remotely at 4pm on 3 January 2025 by circulation to the
parties or their representatives by e-mail.
1
ICC JUDGE GREENWOOD:
Introduction
1.This is the trial of two Insolvency Act applications made by the joint liquidators of two
companies, Stacks Living Limited (“Stacks”) and Staffs Furnishing Limited (“Staffs”,
and together, “the Companies”) both of which are in compulsory insolvent liquidation
as a result of orders made on 4 July 2018 and 19 December 2018 respectively, in each
case on an unopposed winding-up petition presented by Stafford Borough Council (“the
Council”) based on a failure to pay National Non-Domestic Rates Tax (“NDR”) in
respect of trading premises at Unit 31-35, Guildhall Shopping Centre, Market Square,
Stafford ST16 2BB (“the Premises”).
2.Stacks was incorporated on 12 December 2016, and Staffs on 8 February 2018; both were
wholly owned by the First Respondent, Mr Balvinder Shergill (“Mr Shergill”) and he
alone controlled and managed their commercial and financial operations; both carried on
business asa furniture retailer atthe Premises, an uncomplicated venture which
comprised the display and sale of goods which continued to be owned by suppliers until
such time as sold to a customer; accordingly, the Companies themselves owned no stock
of any value; at any moment, their assets comprised, principally, any sums received from
their customers. There was no distinction of substance between the business of Stacks
and that of Staffs, which the Respondents’ own Points of Defence described “in real
terms… [as] … a successor company”. Mr Fagan, for the Applicants, described it more
pejoratively, but equally accurately, as a “phoenix”, which assumed and carried on for a
short time, before its own failure, the failed business of its immediate predecessor.
3.Except for the period between 17 July 2018 and 19 October 2018, when the Second
Respondent, Miss Miranda Smith (“Miss Smith”) was the sole appointed director of
Staffs, Mr Shergill was the Companies’ sole appointed director; during the period of Miss
Smith’s directorship, she had - by the Respondents’ own open admission - no
involvement at all in the affairs and business of the company, which continued, both as
before and subsequently, to be managed and operated by Mr Shergill, who was therefore,
during that period, a de factodirector; during that period, on 21 September 2018, the
Council secured a liability order against Staffs in respect of NDR; it presented a winding-
up petition in respect of Staffs on 1 November 2018, after Miss Smith’s resignation.
2
4.Miss Smith is Mr Shergill’s (life) partner; she currently works as a Workforce Co-
Ordinator in the Children and Families Department of Staffordshire County Council, for
which she has worked for some 21 years; her evidence, which I accept, was that she was
somewhat prevailed upon by Mr Shergill to become Staffs’ director; nonetheless, despite
her misgivings, she was appointed and knew of her appointment, an appointment to
which she agreed; inescapably, she was therefore during that period subject to all the
usual duties of a company director.
5.The Companies are insolvent.
5.1.In respect of Stacks, the Applicants estimate creditor claims in the total sum of
£57,857.17, including £42,885.07 owed to the Council in respect of NDR; in
respect of Staffs, the total sum of £19,579.44, including £15,431.59 owed to the
Council in respect of NDR.
5.2.During its lifetime, Stacks paid (in total) only £580.28 to the Council in respect
of NDR (in fact, as a result of enforcement action by bailiffs, Rossendales, in
August 2018); Staffs paid (again, in total) £2,000, by means of eight instalments
of £250, between 27 September 2018 and 5 December 2018.
5.3.In addition, in each case, is the possibility of a claim by HMRC. In that regard,
neither company registered for (or therefore paid any) VAT, PAYE or NIC;
neither used the services of an accountant or book-keeper; their records, such as
they were, do not enable the Applicants to calculate, with any degree of
precision, what might be due to HMRC, although sums were estimated in
respect of unpaid VAT.
6.On 29 March 2020, Mr Shergill gave an undertaking to the Secretary of State for
Business, Energy and Industrial Strategy, not to act (amongst other things) as a director
of a company for a period of six years commencing on 21 April 2020. Contravention of
that undertaking would be a criminal offence under section 13of the Company Directors
Disqualification Act 1986 (“the CDDA”). By the schedule of unfit conduct to that
undertaking (albeit given solely for the purposes of the CDDA) Mr Shergill did not
dispute that he had failed to ensure that Staffs maintained or preserved adequate records
and had failed to deliver up sufficient accounting records to explain its financial affairs;
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1 cases
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