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England and Wales High Court (Chancery Division) Decisions
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Cite as:  EWHC 1001 (Ch)
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BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES LIST (ChD)
Rolls Building, Fetter Lane
London, EC4A 1NL
B e f o r e :
| IN THE MATTER OF SAINT BENEDICT'S LAND TRUST LIMITED AND IN THE MATTER OF THE INSOLVENCY ACT 1986 CHRISTINE HARPER - and – LONDON BOROUGH OF CAMDEN COUNCIL PRESTON CITY COUNCIL IN THE MATTER OF SHORTS GARDENS LLP AND IN THE MATTER OF THE INSOLVENCY ACT 1986 SHORTS GARDENS LLP
- and –
LONDON BOROUGH OF CAMDEN COUNCIL
Tom Gosling (instructed by Greenhalgh Kerr Solicitors Limited) for the Respondents
Hearing dates: 7 and 24 April 2020
Crown Copyright ©
COVID-19: This judgment was handed down remotely by circulation to the parties' representatives by email. It will also be released for publication on BAILII and other websites. The date and time for hand-down is deemed to be 9.45 a.m. on 27 April 2020.
MR JUSTICE SNOWDEN :
The SBLT Petition
i) a costs order made by me on 20 December 2019 in the sum of £20,040.00;
ii) liability orders made by DJ(MC) Allison on 4 February 2020 in favour of Camden in respect of unpaid NDDR in respect of a property in Hatton Garden, London for 2018-2019 and 2019-2020 in the sum of £29,863.07 (including costs); and
iii) a costs order made by Mostyn J on 27 February 2020 in the sum of £2,082.50.
The Shorts Gardens Petition
i) a liability order dated 15 March 2019 made by DJ(MC) Rimmer in respect of unpaid NNDR for a property in Shorts Gardens, London WC2 for the period 28 August 2018 - 31 March 2019 in the sum of £25,948.36 (inclusive of costs); and
ii) a costs order of DJ(MC) Newton dated 10 February 2020 in the sum of £4,700 in respect of a failed application to set aside the liability order.
The SBLT Petition
Ms. Harper's standing to apply
"An application by a company for an injunction restraining a creditor from presenting a petition for the winding up of the company must be made to a court having jurisdiction to wind up the company."
"Leave was given to amend so as to join those two companies as defendants and enable the plaintiffs to sue, in a representative capacity, for shareholders in those companies, other than the defendant…"
That formulation makes clear that the claim was, with the permission of the court, brought in conventional derivative form to overcome the problem caused by the fact that the company in question was deadlocked. In addition, the company in question was made a party to the proceedings as a defendant so that it could be bound by the result.
"No, you do not...This order prevents you making an application in proceedings. You did not make an application, you merely defended. Defending proceedings brought by others is not making an application."
"In this case the applicant was defending the Board's application for this money to be paid to the Board. Normally a vexatious litigant does not require permission to defend proceedings. It seems that if such a defence fails, the vexatious litigant does require permission to institute appellate proceedings. At present, on the authorities, it appears to be the law that if the first instance judge is a High Court Judge and not merely refuses permission to appeal but also refuses permission under s. 42 of the 1981 Act, there is no way that further consideration can be given to the matter by this court. There is a danger that the judge at first instance, being convinced that his decision is correct, will refuse permission under s. 42 although this court might take a different view of his decision."
Are the debts genuinely disputed?
"Where a liability order has been made and the debtor against whom it was made is a company, the amount due shall be deemed to be a debt for the purposes of section 122(1)(f)(winding up of companies by the court) or, as the case may be, 221(5)(b) (winding up of unregistered companies) of that Act."
"…liability orders are orders of the court like ordinary civil judgments. If a winding up petition is based on such orders the court will seldom look into them, or go behind them, in the absence of fraud, or in the absence of jurisdiction in the court that made the orders, or some other truly compelling circumstance."
Is there a cross-claim?
"31. Saint Benedict's Land Trust have a counterclaim of £40,103.98, with interest being approximately £41,192, together with all costs wasted and generated from the previous court actions regarding proceedings 2990 of 2018.
32. The grounds for the claim is that the monies paid to Greenhalgh Kerr by Harrison Carter on 6 November 2018 to be held on account, was done so under the instruction of the directors of Saint Benedict's Land Trust, being under duress of a petition being advertised."
The Shorts Gardens Petition
"High street shops and other companies under strain will be protected from aggressive rent collection and asked to pay what they can during the coronavirus pandemic, the Business Secretary has set out today (23 April 2020).
The majority of landlords and tenants are working well together to reach agreements on debt obligations, but some landlords have been putting tenants under undue pressure by using aggressive debt recovery tactics.
To stop these unfair practices, the government will temporarily ban the use of statutory demands (made between 1 March 2020 and 30 June 2020) and winding up petitions presented from Monday 27 April, through to 30 June, where a company cannot pay its bills due to coronavirus. This will help ensure these companies do not fall into deeper financial strain. The measures will be included in the Corporate Insolvency and Governance Bill, which the Business Secretary Alok Sharma set out earlier this month."
"Under these measures, any winding-up petition that claims that the company is unable to pay its debts must first be reviewed by the court to determine why. The law will not permit petitions to be presented, or winding-up orders made, where the company's inability to pay is the result of COVID-19.
The new legislation to protect tenants will be in force until 30 June, and can be extended in line with the moratorium on commercial lease forfeiture."
"For the avoidance of doubt, the applicant does not contend that it faces liquidity or operational challenges as a result of circumstances related to COVID-19."
"The charity [sic] is in financial difficulties because the funding it had hoped to receive under the small business grants of £10,000 has not yet materialised and all of the charity income from personal property storage has stopped because its clients who are mainly on low income cannot afford to pay as the majority have either been furloughed or have lost their jobs completely.
It is a fact that does not have to be proved, judicial notice, that almost all companies, but for some specialist companies, as in pharmaceuticals, specialist clothing, personal protection equipment or delivery companies, are affected by COVID-19 and we like all companies in the United Kingdom and the World are going to suffer from cash flow restrictions caused by the effect of the coronavirus."
"…Shorts Gardens LLP is a property company that receives its income from rents since its tenants cannot pay as they have no income because of the effects of the COVID-19 pandemic.
It is a fact that does not have to be proved judicial notice that almost all companies, but for some specialist companies as in pharmaceuticals, specialist clothing, personal protection equipment or delivery companies, are impacted by COVID-19 and we, like all companies in the United Kingdom and the World are going to suffer from cash flow restrictions caused by the effect of the coronavirus."