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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Secretary of State for Business Energy And Industrial Strategy v Sentor Solutions Commercial Ltd & Ors [2022] EWHC 2734 (Ch) (31 October 2022) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2022/2734.html Cite as: [2022] EWHC 2734 (Ch) |
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BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES LIST (ChD)
IN THE MATTERS OF
(1) SENTOR SOLUTIONS COMMERCIAL LIMITED (Company No 12309797)
(2) HALL CONTRACTING SERVICES LIMITED (Company No 12139495)
(3) CLARKSON MURPHY PARTNERS LIMITED (Company No 08327930) and
(4) FABCOURT DEVELOPMENTS LIMITED (Company No 08890452)
AND IN THE MATTER OF THE INSOLVENCY ACT 1986
7 The Rolls Building Fetter Lane London EC4A 1NL |
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B e f o r e :
____________________
SECRETARY OF STATE FOR BUSINESS ENERGY AND INDUSTRIAL STRATEGY |
Petitioner |
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and – |
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(1) SENTOR SOLUTIONS COMMERCIAL LIMITED (2) HALL CONTRACTING SERVICES LIMITED (3) CLARKSON MURPHY PARTNERS LIMITED (4) FABCOURT DEVELOPMENTS LIMITED |
Respondents |
____________________
The Respondents did not appear and were not represented
Hearing date: 16 August 2022
____________________
Crown Copyright ©
ICC Judge Barber:
Introduction
The Companies
(1) Sampson Property Developments Ltd (formerly known as Texmoore Limited) ('SPD');
(2) Fabcourt Developments Limited ('FD');
(3) Clarkson Murphy Partners Limited (formerly known as Sentor Solutions Limited) ('CMP');
(4) Hall Contracting Services Limited (formerly known as Sentor Solutions Advisory Ltd) ('HCS');
(5) Sentor Solutions Commercial Ltd ('SSC').
Common Officers
(1) Alan Goodban acted as a company secretary for SPD and a director for FD. The two appointments overlapped from 9-13 May 2019.
(2) Mark Andrew Johnson acted as a director of both SPD and CMP. The two appointments overlapped from 4-7 February 2019.
(3) Bradley Hall was a director of both HCS and SSC. The two appointments overlapped from 12 November 2019 to 1 October 2021.
The Petitions
Overview
Grounds
(1) Trading with a lack of commercial probity and/or objectionable business activities, such activities including:
(a) use of fraudulent loan notes and bonds without authorisation (all Companies);
(b) carrying out and/or attempting to carry out recovery room / advance fee frauds (CMP only);
(c) making misleading representations with a view to obtaining DWP Kickstart grants (FD and CMP only); and
(d) trading while insolvent (FD only).
(2) Failure to cooperate with the Investigation and deliver up adequate accounting records (all Companies).
(3) Lack of transparency (all Companies).
Relevant Legal Principles
'(a) Even if the SoS thinks it expedient in the public interest to wind up a company, the Court still has a discretion whether or not to make an order.
(b) Before making an order the Court must be satisfied that it is just and equitable to wind the company up.
(c) The burden of proof lies on the SoS to persuade the Court (having proved matters of fact to the requisite civil standard) that it is just and equitable to wind the company up.
(d) The Court must balance competing reasons why the company should be wound up and why it should not be wound up upon a consideration of the totality of the evidence …
(e) As a result of undertaking that exercise the Court must be able to identify for itself the aspects of the public interest which would be promoted by making a winding up order in the particular case …
(f) It is not necessary for the business of the company to involve illegality. As Millett LJ said in Re Senator Hanseatische Verwaltungsgesellschaft mbH [1997] 1 WLR 515 at 522h; [1997] BCC 112 at 117B:
"On the contrary the phrases used (namely "expedient in the public interest" and "just and equitable") to my mind indicate that Parliament did not intend to impose such a restriction but instead simply decided to leave to the Secretary of State to form a view as to what was expedient in the public interest and the court then to decide on the material before it whether the justice and equity of the case dictated that the company concerned should be wound up".
(g) Where the business of the company does not involve the commission of illegal acts or breaches of regulatory requirements the company may nonetheless be wound up if its business is "inherently objectionable" because its activities are contrary to a clearly identified public interest. So in Re Abacrombie & Co Ltd [2008] EWHC 2520 (Ch) the company operated a debtor advisory service. David Richards J explained:
"the purpose of the company's business as it related to clients with equity in their residential property was, prior to the client's bankruptcy, to sell the equity to the client's spouse or partner at as low a price as possible and to use the proceeds to fund the company's charges which were both excessive and unjustifiably charged to the debtor client. The effect, as the company .. well appreciated, was to deprive the debtor's estate of any substantial return of value from the debtor's beneficial interest which was likely to have been the only asset of any substance. The effect was detrimental to creditors and undermined the proper administration of the bankruptcy of the debtor" (see paragraph [60]).
He had earlier at paragraph [15] held:
"The arrangements, as operated by the company, in my judgement, subverted the proper functioning of the law and procedures of bankruptcy".
(h) Such conduct is sometimes described as disclosing "a lack of commercial probity", and whilst this frequently might involve preying on the public and inducing individual members of the public to participate in transactions which are without benefit to them, it can also involve prejudice to the public generally (for example by casting burdens on the general body of taxpayers). An illustration of this may be found in Secretary of State for Business, Innovation and Skills v PGMRS Ltd [2010] EWHC 2983 (Ch); [2011] BCC 368 in which four companies traded at the expense of HMRC (by not paying either VAT or PAYE) until such time as they were insolvent, conduct that the judge held represented a lack of commercial probity.
(i) However in making the judgement whether a business is inherently objectionable "the court has to be careful of being priggish" (see Re Forcesun Ltd [2002] EWHC 443 (Ch) at [26], a point which Mr Chivers QC reinforced with a submission that this was a court of law and not a court of morals. If this is simply a submission that I am bound to decide the case according to law and by reference to principle and precedent I unhesitatingly accept the submission. If this is a submission that the law in this area is devoid of moral content, then I disagree. Concepts such as "inherent objectionability" or "want of commercial probity" are bound to have some moral content, though that content is not the subjective moral perception of the individual judge, but must be informed by any discernible policy of the law and guided by the view of other judges in other cases.
(j) Finally, to wind up an active and solvent company is a serious step, and the Court must be satisfied that reasons of sufficient weight have been advanced to justify taking that course (Re Walter L Jacob & Co Ltd (1989) 5 BCC 244 (above) at 252C-E)'.
'It is important to bear in mind, therefore, although the opinion of the Secretary of State that it is expedient in the public interest that a company should be wound up is the prerequisite to the presentation of a petition by him or her, it is for the court to carry out a balancing exercise based upon all the circumstances and all the evidence before it. It must weigh the factors which points to a conclusion that it would be just and equitable to wind up the company against those which point away from it. In order to carry out the balancing exercise, where the petition is based upon the public interest: "the court must be able to identify for itself the aspect or aspects of public interest which, in the view of the court, would be promoted by making a winding up order in the particular case"'.
Ground 1: Trading with a lack of commercial probity
(a) use of fraudulent loan notes and bonds without authorisation
(1) a YouTube video ('the 2019 Video') posted in 2019 by Mr Goodban (company secretary of SPD and director of FD) entitled 'Texmoore Ltd Student Property' (Texmoore Limited being SPD's former name) identified three student accommodation properties in Canterbury for investment. On the evidence before me, which includes Land Registry records, I am satisfied that (i) at no material time were these properties owned or developed by SPD or FD; (ii) the properties in question were developed by another investment company in or about 2013 and have been owned by a BVI company since 2015; and (iii) the 2019 video was cloned from an earlier 2013 video;
(2) a Vimeo video entitled 'Texmoore 2017 Forecast' which, inter alia, indicated a fund value of £746 million as at 1 March 2017 and provided that 'St Stephen's Place, Trowbridge' had been 'purchased in 2010', with planning permission obtained in 2012 for a leisure park, to include a cinema, hotel and restaurants. To the extent that this was intended as a representation that SPD was the purchaser and developer of this site, I find that it was false. On the evidence before me, which includes a Wiltshire Times article dated 25 October 2013, I am satisfied that the developer of the site was Legal & General.
(1) the warning notices issued by FCA about SPD and FD on 19 May 2020 and 2 March 2021 respectively, stating that they believed that SPD/FD had been providing financial services or products in the UK without their authorisation. In a similar vein, the supervisory letter issued by the FCA to SSC on 8 September 2021, identifying serious concerns regarding SSC, including that SSC and HSC may have misled consumers about the permitted scope of the regulated activities and to have facilitated consumer investments in SPD and FD after the FCA issued the warning notices referred to above;
(2) the identical wording of customer testimonials in the SPD and FD brochures for given customers, notwithstanding that the supposed customers were different people, based in different towns, providing testimonials relating to different companies and investments;
(3) the false photographs provided on FD's website for its Chief Financial Officer, Lawrence Simpson and its Chief Operations Officer, Michael Donnelly. On the evidence before me, I am satisfied that the photographs used were of a US dentist, Dr Andrew I Kanter and a Belgian lawyer, Henrik Viaene respectively, who had nothing to do with FD;
(4) the false and misleading accounts filed in respect of SPD and the Companies. Examples in the evidence before me include the following:
(a) the identical figures in the balance sheet in SPD's accounts in respect of the accounting years ending 30 April 2019 and 30 April 2020. These figures are also exactly double those in the accounts (for the year ending 2 September 2018) of Minerva Development Group Ltd, another company wound up in the public interest on 29 September 2020 for fraudulently securing investor funds for property bonds. The wording of note 11 (Post balance sheet events) in both Minerva Development Group Ltd's 2018 accounts and SPD's 2020 accounts is also identical, right down to missing full stops;
(b) three sets of accounts of the Companies/SPD, comprising CMP's 2019 accounts, FD's 2021 accounts and SPD's 2020 accounts contain figures which are not consistent with those filed for previous years and which are so large that the accounts should have been audited but were not;
(c) FD's website detailing a trading history from 2014, despite FD filing dormant accounts to 28 February 2019.
(b) recovery room/ advance fee frauds
(c) misleading representations to obtain DWP Kickstart grants
(1) CMP's adverts gave the location for the jobs as 'London, NW15QT'. This was a reference to CMP's registered office of 239 Old Marylebone Road, NW1 5QT. From local enquiries undertaken of the building manager of 239 Old Marylebone Road on 16 November 2021, it is clear (and I so find) that CMP did not have any presence at the building. It follows that there cannot have been jobs for new recruits at that address.
(2) FD's adverts gave the location for the jobs as 'Birmingham, B25AL', 'Fulham Green, SW64NZ' and 'London, SE18ND'. From the evidence before me I am satisfied that that the reference to 'Birmingham, B25AL' is simply a reference to FD's registered office of 8 Cherry Street, Birmingham, B2 5AL. From local enquiries undertaken of the receptionist at 8 Cherry Street on 17 November 2021, it is clear, and I so find, that FD had had no presence there for the preceding eight years. Again, therefore, there cannot have been jobs available at that address.
(3) In addition, I find that SPD and FD's adverts were posted at a time when they were failing to pay or communicate with investors.
(d) trading whilst insolvent
Ground 2: Failure to cooperate with the Investigation and deliver up adequate accounting records
(1) the Investigators took all reasonable steps to make contact with the Companies and those operating the Companies, such steps including visiting and sending documentation to the registered office of each of the Companies together with other addresses identified as connected with the Companies and their officers, sending emails to the email addresses connected with the respective Companies and their officers and making telephone calls to all telephone numbers connected with the respective Companies and their officers;
(2) those connected with the Companies became aware of the Investigation. In this regard it is clear from the evidence (and I so find) that (i) communications sent by the Investigators to addresses identified as connected with officers of the Companies and SPD were signed for by individuals in the names of officers or former officers of all of the Companies (FD: Redwood, CMP: M Wynne, HCS and SSC: B Hall) and that (ii) within days of the Investigators sending communications to such addresses (from 29 November 2021 onwards), TM01s (Termination of Appointment forms) were filed at Companies House in respect of two directors of SPD (Mark Johnson and Rory Colinson), one director of HCS (Bradley Hall) and two directors of ED (Paul Redwood and Paul Edmonds), all of which were filed on 10 December 2021;
(3) despite becoming aware of the Investigation, the Companies have collectively failed to provide documents and information to the Investigators and/or to engage with the Investigation at all. No-one from any of the Companies has made contact with the Investigators or provided any documentation to assist with the Investigation. Quite the contrary; as Ms McGowan rightly notes, the 'flurry of resignations' indicates a clear intent to avoid cooperation;
(4) a consequence of the lack of cooperation is that the Investigators have been unable fully to investigate the business and affairs of each of the Companies. In particular, the failure of the Companies to make available to the Investigators any adequate accounting or financial records has hampered the the Investigators significantly in establishing and verifying (i) the financial position of the Companies (ii) the nature and extent of their trading and (iii) the whereabouts of funds paid to the Companies and/or SPD by investors.
Ground 3: Lack of Transparency
(1) None of the Companies or SPD have any visible presence at their registered offices.
(2) Mr Bradley Hall (director of SSC and former director of HCS) has no presence at or connection to his Companies House correspondence address.
(3) When the Investigators attempted to make contact with the Companies via the ten known telephone numbers for the Companies and SPD, six were disconnected, two were answered by individuals with no present connection to the Companies or SPD, one was unanswered and one rang through to a basic EE voicemail message.
(4) Email correspondence sent by the Investigators to email addresses formerly used by SPD, FD, CMP and SSC has failed to elicit a reply.
(5) Photographs on FD's website which are purportedly of senior employees are cloned photographs of unconnected third parties.
(6) Despite SPD and FD claiming to be raising funds to purchase and develop property, there is no evidence that either SPD or FD owned any property at any material time and online representations as to properties owned by SPD are demonstrably false. Moreover, despite claims in FD's website that FD has been actively trading since 2014, FD continued to file dormant accounts until 2019.
(7) Despite purportedly having independent operations, numerous connections between the operations of the Companies and SPD are readily apparent from the evidence. These connections include common payments cards and cards registered to the same address.
Discussion and Conclusions
ICC Judge Barber