England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Cse no: 91/2002/PTA/896 The Royal Courts of Justice The Strand London WC2A 2LL
		29th November 2002

(This transcript has been prepared without the assistance of any documents.)
1. MR JUSTICE LIGHTMAN: I have before me an appeal by Mr Leicester against a decision of District Judge Mayott made on the 20^th November 2000 dismissing Mr Leicester's application for an order to rescind the winding up order made on the 14^th March 1997 against Wilton Fair Ltd, a company of which Mr Leicester was a director and shareholder.
2. The application was made on the 20^th July 2000, over three years after the winding up order. The district judge appears to have mistakenly treated the application as though it was an application for directions under the Insolvency Act; but he directly addressed the issue whether or not the winding up order ought to be set aside on its merits and he dismissed it. The error by the district judge does not, it seems to me, affect the matter as it comes before me.
3. The question before me, as it was in substance before him, is whether or not the winding up order should be rescinded. On this application, which is opposed, Mr Leicester applied for an adjournment in order that further enquiries could be made and further documents could be obtained which might have significance in this case. I refused the application on the ground that such an adjournment could not serve any useful purpose.
4. Mr Leicester and his son, Mark, were the shareholders in another company called Lidel Ltd, and his son was the sole director of that company. In December 1996 Lidel was hopelessly insolvent, owing substantial sums to the Inland Revenue and at an a duly convened meeting of shareholders and creditors, Lidel was placed in insolvent voluntary liquidation, and Mr Stevenson, the first defendant, was appointed liquidator. It is quite clear, from examining the contemporary documents, that both father and son endorsed the decision to place Lidel in liquidation and to appoint Mr Stevenson as liquidator.
5. Mr Leicester has argued before me that various documents are missing from the files which are to be expected to be in the file in the case of such a liquidation. I am satisfied that every proper act has been done to place the company into liquidation, and the presumption of regularity makes up any insufficiency in the documentation presently available. As one example of his complaint, Mr Leicester complains that there is no indication that a duly convened directors' meeting took place. But all steps were taken to place the company in liquidation. Mr Mark Leicester was a sole director and was instrumental in the implementation of the arrangements for placing the company in liquidation. Accordingly, there is no basis it seems to me for any suggestion that anything requiring authorisation by the directors was not duly authorised. It seems to me that there is no basis for suggesting that that liquidation or the appointment of Mr Stevenson as liquidator is invalid, least of all since this all was done at the instance of Mr Leicester who clearly knew about it at all relevant times, and indeed clearly approved of the steps taken.
6. Mr Stevenson, as liquidator, thereafter presented a petition to wind up Wilton Fair on the basis of a debt of £170,000 due to Lidel. The petition was duly verified by a statement and duly presented to the court. Wilton Fair had the benefit of legal and accountancy advice. It acknowledged the debt. It did not dispute the debt and it did not oppose the making of the winding up order. The winding up order was duly made. Mr Leicester, as a director of the company, was fully aware of what was going on, and indeed after the liquidation, he wrote a series of letters to the liquidator making plain that the petition was duly presented and that the debt was due to Lidel from Wilton Fair. For example, by a letter dated the 10^th November 1997, he sought to persuade the liquidator to commence proceedings against members of Wilton Fair; he wrote,

"I clearly understand Lidel Ltd made a short term bridging loan to Wilton Fair; I also understand that that loan was underwritten by all the directors who have substantial personal wealth."

7. And, again, perhaps more importantly, on the 21^st December 1997, he wrote,

"I have not loaned the company WFL the £170,000. It was my company Lidel Ltd. I stated to Mr Alken that he was aware of the fact that he was Lidel's auditor at the time the loan was made, he stated that he would change the accounts to show the loan had been made by Lidel."

8. It was also clearly the view of Mr Mark Leicester that the loan was a loan by Lidel and not by Mr Leicester. Nonetheless, on this application before me, Mr Leicester submits that there was no winding up order and that the debt was not owing to Lidel but was due to himself and/or his wife. As regards the winding up order, I have the official order made by District Judge Stuart Brown, duly endorsed. I have absolutely no doubt that that is the appropriate official order. Likewise, I have a copy of an order made by the same court on the 16^th June 1997, transferring the administration of the proceedings arising specifically from that winding up order. It seems to me clear beyond question that the winding up order was duly made and those documents of themselves are sufficient for this purpose.
9. I turn to the second question raised by Mr Leicester which is that there was no money due to Lidel, the money was due to himself. In this regard he says that he relies on various documents dated 1989 and in particular on the 1990 accounts of Wilton Fair which point to the debt being due to Mr Leicester. Now, it is clear from the 1996 accounts of Wilton Fair that the debt, certainly at that date, was a debt due to Lidel: they specifically say so. I refer to the correspondence, where Mr Leicester confirmed, and says specifically that debt was due to Lidel and not himself. I should add to this that this is further confirmed by looking at the Barclays Account documents which show the payment of £170,000 by Lidel to Wilton Fair, and the explanation for what appears in the 1989 documents and the 1990 accounts and the need to correct what appears in these documents and accounts is recognised by Mr Leicester in a memo in the documents, page 234-235.
10. I told Mr Leicester that this was not an appropriate occasion to investigate in the detail which he wished the question whether or not the debt is indeed due to Mr Leicester rather than Lidel. It seems to be that the court when making the winding up order reached the totally correct view that there was a proper debt, and that on the face of it and as was accepted by the company, the debt was due to Lidel and this was a proper case for a winding up order.
11. If and so far as it may be arguable by Mr Leicester that the debt indeed is due to him and not to Lidel, that is today a matter he may require to be investigated in the course of the liquidation if, and so far as a dispute arises between Mr Leicester and Lidel as to who should prove for the debt of £170,000. It would seem to me, on the material before me, that Mr Leicester has an extremely uphill task in any contention that he may make that he is a creditor, but that is not a matter which seems to me a matter I need trouble myself about on this application.
12. It seems to me absolutely clear on the material before the court, and having regard to the attitude taken by Wilton Fair on that application and indeed the attitude taken by Mr Leicester himself that the winding up order of Wilton Fair was properly made. And I do not think on any conceivable basis could it be just not convenient, or appropriate, for an order to be made today rescinding that winding up order.
13. I have mentioned the three-year period between the date of the winding up order and the date of the application for the order striking out that order. There seems to me to be no conceivable justification, let alone any proper excuse, for that delay. I should add that since that date the position has been continued, the liquidation has continued, and the position today, I am told, is that the liquidation of both companies and the realisation of their assets are practically complete.
14. The rules contemplate that when a winding up order has been made, an application to rescind the decision can be made within seven days. Provision, however, is made for the possibility of an extension of time. But any extension of time must be justified and strictly justified if the extension is to cover any substantial period. It is a jurisdiction to be very cautiously exercised.
15. I need only look at the most recent authority of the case of Reece-v-38 Building Ltd [2000] 1 BCLC, 201-206. It is necessary if an application is made to rescind the winding up order to establish that such an order is required to correct an obvious injustice.
16. I can see no conceivable requirement of justice in this case for any rescission of the winding order. It seems to me that if and so far as there is any prejudice to Mr Leicester by the making of the order of a winding up in this case, he is very largely responsible for it having regard to the position taken at all times before he made the application in the year 2000; and, secondly, in any event, it seems to me that any entitlement he may have, in respect of his debt, is a matter to be resolved in the liquidation in any dispute between himself and the liquidator of Lidel as to the entitlement to prove in respect of this debt of £170,000.
17. In those circumstances I agree entirely with the district judge that this application ought to be refused. I should just add this: Mr Leicester is convinced that there has been a network of deceit and fraud in this case, and there is a need for criminal investigation. He made the allegation to me that the company's bankers and auditors were parties to dishonesty; and that assets of the company have been fraudulently expropriated. These matters are not matters which go to the application before me but they are matters which can perfectly satisfactorily, indeed probably more satisfactorily, be investigated in the winding up. I do not, therefore, think that these matters are matters which in any way support his application to rescind the winding up order.
18. Mr Leicester makes a series that are complaints which do not go to the substance of the matter before me. This is a very sad case. It is plain that Mr Leicester feels a very real sense of grievance but, as it seems to me whether or not any sense of grievance on his part is justified and the larger part of his grievance is against his son) I can see no conceivable justification for the multitude of applications which he has made to the court in relation to this matter, which now cause the liquidators to incur huge costs.
19. I will not, myself, decide today whether there ought to be a Grepe v Loam order made against him; it seems to be that ought to be the subject of a separate application and a matter on which both parties can, if necessary, be heard. I would hope that, having regard to this judgment, litigation or applications by Mr Leicester in relation to the two companies under consideration in this case will come to an end. But I doubt that if Mr Leicester does pursue further applications or litigation, an application for a Grepe v Loam order, prohibiting any further application in relation to these two liquidations, will no doubt be sympathetically considered by the court. But, as I say, that is a matter which I think I must leave over and see what the position taken by Mr Leicester is after this matter has now been finally resolved by me.
20. I, therefore, dismiss the application.