England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CHANCERY DIVISION (COMPANIES COURT)
(THE VICE-CHANCELLOR)

		Royal Courts of Justice Strand London WC2
		24 July 1996

LORD JUSTICE SAVILLE: On 9th May this year the Secretary of State for Trade and Industry issued winding up petitions against SHV Senator Hanseatische Verwaltungsgesellschaft mbH (SHV), Titan Marketing Gesellschaft (TMG) and Titan Business Club and shortly afterwards applied to the Court for the appointment of a Provisional Liquidator. The matter came before the Vice-Chancellor who on 14th June refused to appoint a Provisional Liquidator but instead enjoined SHV and TMG pending the hearing of the winding up petition from (in effect) continuing to operate in this country what is known as the Titan scheme. From this decision SHV and TMG appeal with the leave of the Vice-Chancellor. Since the Titan Business Club appears to be no more than a name used by SHV and TMG for the purposes of the Titan scheme it has played no separate part in the proceedings.

The petitions are issued under the powers given to the Secretary of State under Section 124A of the Insolvency Act 1986. This Section provides, among other things, that where it appears to the Secretary of State from any report made or information obtained under Part XIV of the Companies Act 1985 (company investigations etc) that it is expedient in the public interest that a company should be wound up, he may present a petition for it to be wound up if the court thinks it just and equitable for it to be so.

The case made by the Secretary of State is in effect that the sole or main business of the Appellants in this country is the operation of the Titan scheme; and that since this scheme is either an unlawful lottery or has (in itself or through its underlying administrative structure) undesirable characteristics it is just and equitable for those running it to be wound up; and that meanwhile the promoters of the scheme should be stopped from operating it.

Section 1 of the Lotteries and Amusements Act 1976 provides that lotteries which do not constitute gaming are unlawful, except as provided in that Act. It is not suggested that the scheme is gaming or a lottery permitted by this Act. The Vice-Chancellor held that the scheme was an unlawful lottery. He also considered that the Secretary of State had established a fairly arguable case that the administrative structure underlying the scheme, while not illegal, was "highly unsatisfactory, highly suspicious and thoroughly undesirable."

Mr Bannister QC on behalf of the Appellants accepted, in my view wholly correctly, that if the Titan scheme was a lottery, then it would be difficult (to say the least) to challenge the interim orders made by the Judge. However his argument was, in short, that the scheme was not a lottery and that since Section 124A of the Insolvency Act only applied to unlawful activities, there was no proper basis for the orders made by the Vice-Chancellor. In these circumstances the first question is whether or not the scheme is an unlawful lottery. To answer that question it is necessary only to look at the scheme operated by the Appellants and not at the full background to the case, which the Vice-Chancellor has set out in his judgment.

The Titan scheme, at least as it operates in this country, is based upon invitations to become members of the Titan Business Club. In order to take up the invitation the person concerned attends a recruitment meeting organised by persons described as self-employed consultants of SHV, is interviewed by one of these consultants, signs an application form and pays what was originally £2500 but which was recently increased to £3000. The new recruit then becomes what is called a Junior Partner with the right (but no obligation) to seek to introduce, by the same means, new members to the Titan Business Club. The Junior Partner receives £450 for each of the first two new members he successfully introduces, which comes from the money paid by those new members. He receives no more from those first two new members but if and when he successfully introduces a third new Member he becomes what is called a Senior Partner and receives £1220 from the money paid by that new member. In addition for each of the first two new members which that new member in turn successfully introduces the Senior Partner will receive £770 from the money paid by them; and so on down the line, since each new member becomes a Junior and then (if and when he successfully introduces a third new member) a Senior Partner and is treated in the way I have described. If a Senior Partner successfully introduces more than three members they are treated in the same way as the third introduction, so that the Senior Partner gets £1220 from each of them, £770 from each of the first two introduced by them, £770 from the first two in turn introduced down the line and so on.

Under this scheme, therefore, £1220 of the £2500 or £3000 paid by each new member is received by the Junior or Senior Partner concerned. The balance is distributed among the consultants and the Appellants. As will be appreciated from the foregoing, a new member will make £450 from each of the first two members he introduces, £1220 from each of the subsequent members he introduces, and further amounts of £770 the number of which (if any) depend entirely on the success of the latter members in introducing two new members and so on down the chain of the particular "family tree" in question. At least in theory, very large amounts indeed could be generated by this means, given each new layer of membership is successful in introducing new members. The scheme therefore provides the organisers and their "self-employed consultants" with half the amounts paid by members, and the latter with the chance of recouping their outlay and making money when and if other members join. The scheme has no other purpose.

There is no statutory definition of a lottery. Mr Bannister QC submitted that an essential feature of a lottery is the distribution of money or other prizes entirely by chance or, in other words, by the equivalent of drawing lots. He cited Taylor v Smetten (1883) 11 QBD 207, Hall v Cox [1899] 1 QB 198 and Scott v DPP [1914] 868, which do indeed support this general proposition. Building on this Mr Bannister submitted that since the receipt by participants, whether Junior or Senior Partners depended upon the exercise of skill in persuading others to join the scheme, this essential feature was lacking and the scheme could not be a lottery.

In my judgment the correct starting point in any given case of this kind is to adopt the approach suggested by Lord Wilberforce in Seay v Eastwood [1976] 1 WLR 1117. This case was concerned with the question whether the playing on fruit machines installed in a betting shop could be said to be part of the licensed business of bookmaking carried on at those premises, but the following passage from the speech of Lord Wilberforce is of general application:-

"Legislation against, or controlling, gaming, wagering and betting is many centuries old in the United Kingdom. With only moderate success Parliament has endeavoured to keep up with the enormous variety of these activities which has arisen from the ingenuity of gamblers and of people who exploit them. It is impossible to frame accurate definitions which can cover every such variety: attempts to do so may indeed be counter-productive, since each added precision merely provides an incentive to devise a variant which eludes it. So the legislation contains a number of expressions which are not, or not precisely defined: bet, wager, lottery, gaming, are examples of this. As to these, while sections appear in various Acts saying that a particular activity is, or is deemed to be, within the word, the general meaning is left to be decided by the court as cases arise under the common law. The process, and I think it is a very sound one, is then for magistrates, using their local knowledge, experience of the world and common sense, to give a sensible interpretation of the expressions used, subject to control of their decision by a court itself experienced in deciding this type of question. When, as should rarely occur, higher appellate courts are required to review these cases, they should, in my opinion, endorse decisions which they can see have been reached and confirmed in this way. Refined analytical tools are not suitable instruments in this context."

As can be seen from this passage, an over-analytical approach should not be adopted, but rather one of common sense. In the present case, the reality of the matter is undoubtedly that those persuaded to join the scheme did so and paid their money in the hope of the rewards that would result from those afterwards joining their particular "family tree." True it may be said that a given member might be able, by the exercise of his own skill, to select and persuade others to attend a recruitment meeting and (if they were acceptable) to induce them to become a member. By doing so that person would recover £450 or (after the second success) £1220 from each, but the scheme does not stop there, for once a member becomes a Senior Partner there is a chance that other and potentially much greater glittering prizes will come (if at all) from further down the "family tree." Whether or not they do depends on the success or failure of others down the line. The fact that those down the line might themselves exercise skill in persuading others to join is to my mind irrelevant, since whether they can and do, and indeed whether further members join for whatever reason is, so far as any particular Senior Partner participant is concerned, entirely a matter of chance. It seems to me that a scheme can be a lottery even if some of the rewards can be said to be gained by the application of an element of skill on the part of the participant, provided the scheme to a substantial extent offers other rewards dependent entirely on chance: see, for example, Boucher v Rowsell [1947] 1 All ER 870. Mr Bannister submitted that a Senior Partner might in fact exercise skill in helping to persuade others down the line to join the scheme, but there is no evidence that this happens and indeed on the face of it would be most unlikely to happen, since it would be in the interests of the Senior Partner to recruit a possible new member himself (thereby getting £1220 instead of £770) and thus to deprive members further down the line of the reward from making a successful introduction themselves.

Mr Bannister also submitted that the "self-employed consultants" or others who run the recruitment meetings exercise skill in persuading people to sign up to the scheme and pay their money. This is undoubtedly true. As more fully described by the Vice-Chancellor the meetings are conducted in what can perhaps be described as a "revivalist" style, with music and chanting and the oft repeated promise of the chance of great rewards for those wise and clever enough to join Titan. Mr Bannister also submitted that since this skill was being exercised on behalf of the existing members, this was again sufficient to prevent the scheme from being a lottery. In this connection Mr Bannister relied on Moore v Elphick [1945] 2 All ER 155, which is authority for the proposition that if participants in what would otherwise amount to a lottery rely upon the application of skill by their agent to generate prizes, the skill will be treated as their own and the scheme will not be a lottery for that reason. The difficulty with this argument is that there is no evidence to suggest that those running the recruitment meetings do so as agents for the members. Mr Bannister relied on the application form which describes SHV as managing the scheme, but this comes nowhere near demonstrating that SHV or the consultants run the recruitment meetings as agents, especially when it is remembered that they stand to make money themselves from the introduction of new members. In truth it seems to me that the skill deployed at the meetings is deployed by and for the promoters of the scheme, and not the participants.

The Vice-Chancellor, after reviewing all the relevant authorities, concluded that there was no real point of distinction to be drawn between the present scheme and that held to be an unlawful lottery by the Divisional Court in DPP v Phillips [1935] 1 KB 391. As I understood him Mr Bannister in the end did not seriously suggest that this case was distinguishable; his main submission being simply that it was wrongly decided.

In my judgment DPP v Phillips is good law and is indeed indistinguishable from the present case in all material respects. It has in fact been cited and relied upon in subsequent cases with no hint of disapproval. The facts of that case and the holding are conveniently set out in the head note in the following terms:-

A company, having bought a quantity of note cases at a price of less than 1s 6d each, devised a scheme for selling them at a profit, and issued to the public a leaflet in accordance with the terms of which the scheme was conducted. The leaflet informed a person desirous of participating in the scheme that on filling up and sending in an attached order form together with £1 there would be sent to him a note case and a supply of the leaflets the order forms of which would be marked with a number allotted to him; that he should get other persons to give orders for note cases, using these forms; that he would be entitled to no benefit from the first three of these orders, but would be paid a commission of 10s on every other order received on his forms and on sales made as a result of these orders; that whenever an order was received on one of his forms, after the first three, a supply of forms also marked with his number would be sent to the buyer, and that the participant would be paid a commission of 10s on each of the first three sales made by every one to whom one of the forms so numbered was sent; and that there was no time limit to the scheme, but that the maximum commission payable to a participant was £20,000;-

Held, that, inasmuch as, with the exception of commissions resulting from orders directly obtained by the participant himself, all the commissions which he received would result from orders given by persons over whom he had no control and would depend so far as he was concerned not upon his skill or work but upon pure chance, the scheme was a "lottery" within the meaning of the Lotteries Act, 1823, s. 41."

In the course of his judgment Lord Hewart CJ said (at page 401):-

"What then is being done? There is here the publication of a scheme. What is the nature of that scheme? Is it not a scheme in the words, cited from Webster's Dictionary and approved by Hawkins J in the well known case of Taylor v Smetten, for the " distribution of prizes by lot or chance"? There is no magic in the word "distribution." The word "payment" will do just as well. There is no magic in the word "prizes." "Commission" or "reward" will do just as well. Here, as it seems to me, it is quite obvious that the person who accepts the invitation contained in this leaflet is paying the sum of £1 in order that he may have the opportunity of setting a ball rolling, over whose revolutions, after the first four at any rate, he will have no control, and it is a pure matter of chance whether the return upon his money will prove to be a few shillings or a great many pounds.

I need not elaborate the matter. I think that this leaflet speaks for itself and has the word "lottery" written all over it."

To my mind this passage exemplifies (some forty years in advance) the approach suggested by Lord Wilberforce and I would respectfully approve it together with the reasoning in the rest of that judgment and that to be found in the judgments of Branson J and Du Parcq J in the same case. Mr Bannister submitted that the error into which this Court fell was to confuse want of control with lot or pure chance, since in that case and the present, the element of skill of the member in selecting and inducing others to join can itself be said to some extent to be instrumental in leading others to join down the line. To my mind, however, such an argument is a good example of the over-analysis deprecated by Lord Wilberforce. Mr Bannister also instanced cases where leases were granted for a rent dependent on profits over which the lessor had no control, or where managers of an insurance company obtain "override" commissions from the activities of subordinates over whom they also have no control, as demonstrating that there is a difference between lack of control and the necessarily random chance of a prize or reward created by a lottery properly so-called . In my view, however, Mr Bannister is again seeking to over-analyse the matter, since as a matter of ordinary language no-one would describe such commercial arrangements as entailing that the lessor or the manager was participating in a lottery. In the present case, however, it seems to me that this is precisely what those who join the Titan scheme are doing. They pay their money for one reason only, namely to gain the chance, and it is only a chance, of reaping rewards from those who in turn pay and join for the same reason. One source at least of the potential rewards comes from those over whom the participant has no control and to my mind it follows as a matter of ordinary language and common sense that in this respect at least the participant is taking part in a scheme properly described as the distribution of prizes or rewards entirely by chance. In other words, looked at as a whole this scheme too has the word "lottery" written all over it.

In these circumstances I would dismiss this appeal and it is unnecessary to consider the submission of the Secretary of State to the effect that even if the scheme was not an unlawful lottery, nevertheless there was a proper basis for the winding up petition and thus for interim relief. It is thus also unnecessary to go into further details of the case, all of which, as I have said, are comprehensively set out in the judgment of the Vice-Chancellor. I should however add that I was entirely unpersuaded by Mr Bannister's submission that (leaving aside such cases as may arise, for example, under the regulatory provisions of the Financial Services Act 1986) Section 124A of the Insolvency Act 1986 only applies where it can be shown that a company is acting unlawfully, because its business or its business methods are illegal. To my mind there is nothing in the Section that suggests that it is so limited. 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 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: see, for example, per Nicholls LJ (as he then was) in Re Walter L Jacob & Co. [1989] BCLC 345 at 352-353.

There are two further points that I should mention. First, the Secretary of State sought and obtained leave (as did the Appellants) to adduce further evidence before this Court. I have looked at this material, but to my mind it took the matter on which I have reached my decision no further. Second, it seemed at one stage that Mr Kaye QC on behalf of the Secretary of State was advancing a submission that we should interfere with the decision of the Vice-Chancellor by substituting the appointment of a Provisional Liquidator in place of the injunctive relief ordered. Suffice to say that on this interlocutory matter I was quite unpersuaded that there were any good grounds for taking such a course.

LORD JUSTICE MILLETT: I have had the advantage of reading in draft the judgment of Saville LJ. I am in full agreement with him, and with his reasons, that the Titan scheme is a lottery. I add a few words of my own in deference to the careful and lucid submissions which were advanced by Mr. Bannister on behalf of the Appellants and because of the general importance of the subject.

Although lotteries have been unlawful for more than two hundred years, Parliament has never attempted a definition. The reason for this is not far to seek. It may be found in the words of the Lord Justice General in Barnes v Strathern (1929) J.C. 41,46:

"There is no limit to the ingenuity of the devisers of projects such as this, and there is accordingly no end to the variety of schemes which may constitute a lottery."

In Seay v Eastwood [1976] 1 WLR 1117 Lord Wilberforce commented at p. 1121 that:

"It is impossible to frame accurate definitions which can cover every such variety: attempts to do so may indeed be counterproductive, since each added precision merely provides an incentive to devise a variant which eludes it."

So Parliament has left it to the courts to decide what constitutes a lottery by references to the general underlying idea. They have consistently held that what lies at the heart of the concept is "the distribution of prizes by lot or chance": see Taylor v Smetten (1883), 11 207; Atkinson v Murrell [1972] 2 QB 274; Whitbread & Co. Ltd. v Bell [1970] 2 QB 547; Reader's Digest Ltd. v Williams [1976] 1 WLR 1109; Imperial Tobacco Ltd. v A-G [1981] AC 718. This is a description, not a definition. There is no magic in the word "prizes": any form of reward or commission is sufficient: D.P.P v Phillips [1935] 1 KB 391. The distribution must depend entirely on chance: the presence of any element of skill means that the scheme is not a lottery: see Hall v Cox [1899] 1 QB 198; Scott v DPP [1914] 2 KB 868. But this refers to the skill of the competitor in achieving a winning result; not to the skill of the promoter in selling tickets.

The Titan scheme is a multi-level snowball or money circulation scheme. As such, it most closely resembles the chain letter, versions of which have consistently been held to be lotteries. It has little in common with the traditional form of lottery in which participants pay nominal sums to buy tickets entitling them to take part in a draw for prizes. In the Titan scheme they pay substantial sums to take part, and thus may be said to buy tickets. But there is no draw and there are no prizes, at least in the traditional sense. Participants pay for the right to sell tickets to further participants and obtain commission from the sales. There is nothing beyond the sale of tickets and the distribution of the proceeds of sale. The scheme consists entirely of the sale of participations in itself.

These features led Mr. Bannister to submit that there is no lottery. Commissions on the sale of participations, he said, are not distributed at random but strictly in accordance with preset rules, and depend on the skill and effort of those who introduce the new participants. This is correct as far as it goes. Participants do not join in order to take part in any kind of competition, for there is none. Each new participant pays his money in order in his turn to become effectively a promoter of the scheme and earn commission from the sale of further participations. Such skill and effort as are expended by participants are expended in promoting the scheme, not in winning a competition.

But people do not join such schemes without the hope of rewards out of all proportion to the effort required of them, and the Titan scheme is no exception. Recruits are induced to part with substantial sums by the prospect of easy money and very large gains. This is due to the multi-level character of the scheme. Participants can recover their initial outlay by themselves directly recruiting new members, though they have to recruit at least four new members to achieve this. In order to achieve the spectacular rewards which are held out to them, they depend on commissions from the sale of participations by their recruits and by those whom their recruits have recruited in their turn, and so on down the line apparently ad infinitum. Whether any commission on such indirect sales will ever be earned, and if so how much, is due to factors which are completely beyond the control of the original participant and are wholly unpredictable.

It was the presence of this feature which was held in DPP v Phillips, [1935] 1 KB 391 to make the scheme there under consideration an unlawful lottery. Mr. Bannister rightly conceded that the Titan scheme is not distinguishable in any material respect from the scheme in that case. He submitted that the case was wrongly decided and invited us to overrule it. But both schemes are well within the mischief which the Lottery Acts have been enacted to prevent. I think not only that the case was rightly decided, but that a decision to the contrary would emasculate the Lottery Acts and lead to the introduction of a great many schemes whose legitimacy would depend upon the kind of over-elaborate analysis against which Lord Wilberforce warned in Seay v Eastwood.

It is, however, another feature of the scheme which is far more pernicious and which gives much greater cause for concern. This is the certainty that the scheme will cause loss to a large number of people, and that the longer the scheme is allowed to continue the greater the number who will inevitably suffer loss. This is the necessary consequence of the fact that, in order to recover his money (let alone make a profit), each new participant must recruit several further participants, who then find themselves in the same situation. Those who have only just joined can have had no opportunity to enlist further members. Until they do so they have lost their money. Yet at every stage of the life of the scheme from start to finish such members not only greatly outnumber those who recruited them, but outnumber all other members of the scheme put together.

The number of persons who are sufficiently gullible to be persuaded to join may be very large but it is obviously finite; so is the amount of money which can be raised by a scheme of this kind. The scheme is bound to come to an end sooner or later. When it does most of its members will have lost their money. This is not merely likely; it is a mathematical certainty. It is as certain as the fact that the organisers, who take almost two thirds of the money paid by each new participant, will have made a substantial profit. The scheme is merely a device for enabling the organisers and a relatively small number of early recruits to make potentially very large profits at the expense of the much larger number of those who are recruited later. Every new participant is in truth gambling on the scheme continuing long enough for him to recover his money and, he hopes, make a profit. But the scheme is not, of course, held out to him on this basis.

Schemes of this kind are inherently objectionable and the Court has consistently held that it is just and equitable to wind up the companies which operate them. They tend to be sold on a false and deceptive basis, sometimes explicit but usually implicit, that they are a certain source of profit for those who join and are capable of lasting indefinitely. A particular vice of such schemes is that they encourage similar dishonesty on the part of their members, who can recover their money only at the expense of new members whom they induce to enter the scheme. In Re Koscot Interplanetary (UK) Ltd. (Unreported: 31st. July 1972) Megarry J said at p. 44:

"Once they had paid their money, the only real prospect they had of recovering it or of making a profit was to induce others to part with their money in a similar way. I cannot imagine that any resolutely honest man, once he had discovered the true nature of the scheme, would attempt to get his money back by inducing others to purchase franchises; and for such a man there is little save the prospect of a loss. But some honest men are less than resolutely so; and for them there is the temptation, to which some may yield, of recouping themselves at the expense of those of their friends and acquaintances who can be beguiled into buying a franchise. There are others who are simply gullible or deluded, and for them there may come the temptation to find others of their kind. For all these, and others, there is the choice between bearing the loss themselves and spreading the fraud. The scheme was one which had the quality of both effecting a swindle and tending to corrupt those swindled by making them confederates with the company in a dishonest scheme."

That is strong language, but in my opinion such language is amply warranted by any scheme which must be sold to the public on an implicitly false basis or which cannot be sold at all. Like any lottery, it holds out the promise of spectacular rewards for the few at the expense of the many. Unlike the ordinary lottery, however, it does not charge nominal sums to enter to people who knowingly and for their own amusement risk a small sum in the remote hope of a great prize. If the Secretary of State's allegations are to be believed, the Titan scheme pretends to be a commercial operation in which the public are encouraged to "invest" substantial moneys, often borrowed, in what, from the point of view of the "investors" as a whole, is cynically set up as a loss-making venture.

If the Secretary of State makes good his allegations, he is plainly entitled to the view that it is expedient in the public interest that the company be wound up in order to protect the public by bringing the scheme to an end. I reject Mr. Bannister's submission that the Secretary of State has no business to intervene in a case where no illegal activity is being carried on. The expression "expedient in the public interest" is of the widest import; it means what it says. The Secretary of State has a right, and some would say a duty, to apply to the Court to protect members of the public who deal with the company from suffering inevitable loss, whether this derives from illegal activity or not. A common case in which he intervenes is where an insolvent company continues to trade by paying its debts as they fall due out of money obtained from new creditors. The insolvency is the cause of the eventual loss, but it is the need to protect the public, not the insolvency, which grounds the Secretary of State's application for a winding up order in such cases. The analogy with his allegations in the present case, while not exact, is close.

The safeguard for the individual is that the decision to wind up the company is not left to the Secretary of State but to the Court, which must consider whether it is just and equitable to do so. In reaching its decision the Court will take into account the interests of all parties, present members and creditors of the company and present participants in the scheme, as well as the interests of the public who may hereafter have dealings with the company.

The Vice-Chancellor was plainly right to impose a temporary cessation of business pending the hearing of the winding-up petition. Given the nature of the scheme and the serious possibility that Secretary of State will make good his allegations, a temporary cessation of the company's activities must be desirable. We were told that there are at present nearly 10,000 members of the scheme in the United Kingdom. At least 7,000 of them must have lost all or some of their money and be seeking to recruit at least four further members in order to recover their money. It cannot be right to allow the scheme to continue in operation pending the hearing of the petition by which time, if they have been successful, there could be 50,000 members of whom at least 35,000 would be out of pocket.

The Vice-Chancellor declined to appoint a provisional liquidator and granted temporary injunctions against the company instead. Neither remedy is likely to be completely effective to prevent the organisers from setting up a similar scheme in the name of another entity and making use of the membership of the existing scheme to continue their activities. In the absence of suitable undertakings from the individuals behind the scheme to refrain from doing this, I would for my part have thought it much the better course to appoint a provisional liquidator. This would have a number of advantages. It would put in place an independent officer of the Court to take charge of the company's activities pending the hearing of the petition and to be a focal point for the present members to turn to for advice as to their position. He would also be entitled to obtain possession of the current membership lists and ensure that they could not be used, without the approval of the Court, to operate similar schemes pending the hearing of the petition. But the Secretary of State did not press us to vary the Vice-Chancellor's order, and I am not prepared to go so far as to say that he erred in principle in the way in which he exercised his discretion.

I agree that the appeal must be dismissed.

THE MASTER OF THE ROLLS: I agree with the reasons given by Saville LJ and Millett LJ for saying this appeal should be dismissed. I note what Millett LJ says about the advantages of appointing a provisional liquidator and agree with this. However these advantages would not justify interfering with the decision of the Vice-Chancellor as to the relief which should be granted, which I do not regard as being in any way inappropriate.

The judgments on this appeal make it clear that schemes of this sort are illegal. They involve those who set up, promote, purvey, and administer the scheme in criminal offences. This I hope will deter those who may be tempted to create clones of Titan.

Order: Appeal dismissed with costs. Secretary of State's costs to be added to the costs of the petitioner in the event a winding up order is made.