The Commissioners For Her Majesty's Revenue And Customs V. Bodychell Recycling Limited
| Jurisdiction | Scotland |
| Judge | Sheriff Philip Mann |
| Court | Sheriff Court |
| Date | 08 September 2011 |
| Published date | 12 September 2011 |
SHERIFFDOM OF GRAMPIAN HIGHLAND AND ISLANDS AT PETERHEAD
Peterhead September 2011 Sheriff Mann
Act: Gibb
Alt: Mr Milne as Shareholder of the Company
The sheriff having resumed consideration of the foregoing petition Finds (1) that the amount of the share capital of BODYCHELL RECYCLING LTD paid up or credited as paid up does not exceed £120,000 (2) that the said company is unable to pay its debts; Therefore SUSTAINS the first plea in law for the Petitioners; DISMISSES the pleas in law for the Company and for Mr Gordon Milne; ORDERS that the said Company having its registered office at Bodychell, Memsie, Fraserburgh, Aberdeenshire AB43 7DB be wound up in pursuance of the Insolvency Act, 1986; Nominates and Appoints Gordon MacLure, Bishop's Court, 29 Albyn Place, Aberdeen to be the interim liquidator of the said company with the usual powers, all in terms of said Statute and of Law; Reserves meantime the question of expenses and appoints parties to be heard thereon within the Sheriff Court House, Queen Street, Peterhead on 14 October 2011 at 9:30am.
Sheriff Philip Mann
Note/
Note
1. Background
1.1 This is an application on behalf of the Commissioners for Her Majesty's Revenue and Customs ("the Petitioners") to wind up Bodychell Ltd ("the Company") under Section 124 of the Insolvency Act 1986 ("the 1986 Act"). The case called before me for proof on 15 August 2011, proof having been assigned by the interlocutor of a brother Sheriff dated 21 June 2011. By that same interlocutor the Sheriff had allowed Mr Gordon Milne, referred to in the interlocutor simply as "Mr Milne" and whose address (according to the averments in the record) is Bodychell, Memsie, Fraserburgh, to enter the process as a shareholder and ordained him to lodge defences within 14 days with a period of adjustment thereafter.
1.2 When the case called on 15 August 2011 the Petitioners were represented by Mr Gibb, solicitor. Mr Milne appeared as a party litigant. Mr Milne had, by that time, lodged answers but no record had been made up. I allowed a brief adjournment to allow Mr Gibb to have a record prepared and lodged.
1.3 At the outset of the hearing before me both parties indicated that they intended not to lead any witnesses. There was no formal renunciation of probation and no joint minute agreeing any facts. Accordingly, this being a proof, I was constrained to proceed on the basis of such facts as might be established by reference to the record, to admissions made therein and to any concessions made in submissions. This led me to observe that the Petitioners' case seemed to depend largely upon the certificate under Section 25A of the Commissioners for Revenue and Customs Act 2005 ("the 2005 Act") which had been lodged by the Petitioners; and to query whether I could take cognisance of it if it were not spoken to by a witness. I allowed Mr Gibb a further short adjournment to consider the point. Mr Gibb then referred to the cases of Inland Revenue Commissioners v Findlay McClure 1982 SLT 417 and Advocate General v Ronald George Shepherd (reported at www.scotcourts.gov.uk/opinions/mcc0507.html) and submitted that there had been no challenge to the section 25A Certificate either by the Company or by Mr Milne. The Petitioners were, therefore, entitled to rely on the Certificate in the absence of its being spoken to by a witness. Mr Milne maintained that I was not entitled to look at the section 25A Certificate if it was not spoken to by a witness. I allowed the hearing to continue without expressing a concluded view on that point and on the basis that I would determine it in the course of this judgement. Parties were content to proceed on that basis. This matter is dealt with at paragraph 4.2 of this judgement
1.4 It will be observed that Mr Milne was allowed to enter the process as a shareholder. The purpose of his entering the process was to protect himself, rather than the company, from the consequences of a winding up. I would have expected Mr Milne to have made averments with that in mind but his Answers clearly bore to be made on behalf of the Company. They commenced with the words "The Respondent Company Craves the Court" and they then set out a number of craves all of which were said to be "sought as remedies by the Respondent Company". The Company was not represented at the hearing before me. Mr Milne had no right of audience except as a party litigant in his capacity as a shareholder. This is confirmed in the Opinion of Lord Hodge at paragraph [8] in his judgement in the case of Her Majesty's Secretary of State for Business and Regulatory Reform for an order to the wind up UK Bankruptcy Limited [2009] CSOH 50 and in the related case Secretary of State for Business, Enterprise and Regulatory Reform v UK Bankruptcy Ltd 2011 S.C.115, which followed upon Lord Hodge's reference to the Inner House. Mr Gibb, in fairness to him, did make a preliminary point that Mr Milne's Answers should be refused but, in the event, he did not insist upon that and he made no motion for summary decree or the like. Accordingly and despite the fact that Mr Milne's pleadings appeared to be made on behalf of the Company, I was of the view that as a party litigant in his own right as a shareholder of the Company he was at least entitled to seek to persuade me in submission that the Petitioners' case had not been made out.
1.5 It was against the foregoing background that the hearing proceeded.
2. Submissions on behalf of the Petitioners.
2.1 Mr Gibb relied on the ground set out in section 122(1)(f) of the 1985 Act, namely that the Company was unable to pay its debts. To be able to succeed on that ground he had to establish one or other of the matters set out in section 123 of the Act. He founded upon Section 123(1)(e) in terms of which a company is deemed to be unable to pay its debts if it is proved to the satisfaction of the court that it is unable to pay its debts as they fall due.
2.2 Mr Gibb indicated that the Petitioners relied on the section 25A Certificate. The certificate referred to a schedule which set out various debts, including amounts, ranging from £1,916.71 to £5,250, due under determinations made by the Commissioners in terms of Paragraph 36 of Schedule 18 of the Finance Act 1998. By paragraph 39 of that schedule these determinations had effect for enforcement purposes as if they were self-assessments by the Company. The Company could have made the relevant returns which would have superseded the determinations. The Company had not done so. This process was not the appropriate process to determine the liability of the Company (Lord Advocate v McKenna 1989 SLT 460).
2.3 Mr Gibb referred to a passage in "The Law of Corporate Insolvency in Scotland" third edition page 96 where it was pointed out that Dillon LJ in the case of Taylors Industrial Flooring Ltd v M & H Plant Hire (Manchester) Ltd [1990] B.C.L.C 216 had said that where a company disputes a debt it must establish a substantial ground for doing so in order to avoid the winding-up petition being successful. In this case there could be no challenge to the determinations as they had not been appealed (Commissioners for Inland Revenue v Pearlberg [1953] 1 AER 388). By section 25A(1) of the 2005 Act the section 25A Certificate was sufficient evidence that the sum mentioned therein was unpaid. Under reference to the case of Re Lummus Agricultural Services Ltd [1999] B.C.C. 953 Mr Gibb submitted that the respondents had to show special reason why the court should not grant the winding-up order.
2.4 In anticipation of Mr Milne's submissions Mr Gibb made the following points.
2.4.1...
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