Jewelite Trading Ltd v City of Westminster

The appeal challenges a winding up order made by ICC Judge Prentis on 8 July 2019 for unpaid liability orders (non-domestic rates and council tax) totalling around 72,000. The appellant argued the order was unjust because of defective service and because the directions hearing should not have been treated as a final hearing in its absence. The court held that service to the company's registered office was valid under the Companies Act 2006 (section 1139) and the Insolvency Rules/CPR, and that the judge had considered the totality of the evidence and was entitled to exercise his discretion to wind up the company rather than grant another adjournment. The court also relied on the company's long delay, multiple adjournments, the absence of evidence of a real dispute or solvency, and the lack of engagement by the Official Receiver in rejecting the appeal.

This is an appeal from a winding up order made on 8 July 2019 following liability orders obtained by the respondent in respect of two properties for non-domestic rates and council tax. The appellant company had been the subject of a statutory demand and a petition; the matter was adjourned repeatedly while the company sought to challenge liability orders in the magistrates' court, an application which was withdrawn and then unsuccessfully pursued by judicial review. The company did not attend the 8 July hearing and the petitioning creditor obtained a winding up order.

The appellant relied on two principal grounds: (i) defective service of the order fixing the hearing (the company said notice was sent to a paralegal's email address which went to junk), and (ii) that the 8 July hearing was a directions hearing and it was inappropriate to make a winding up order in the company's absence. The court framed the issue as whether the Judge's decision was unjust because of a serious procedural irregularity.

The court analysed service rules, noting the Insolvency Rules incorporate modified parts of the CPR and refer to Companies Act methods of service, and observed that service by post to the registered office is effective under section 1139 of the Companies Act 2006. The order fixing the hearing had been sent to the company's registered office and there was no evidence of non-receipt, so service was effective. On the substantive point the court accepted the Judge had a broad discretion and had considered the evidence; there was some undisputed debt, the company had had a significant period to put forward evidence of a genuine dispute or of solvency but had not done so, and the Official Receiver had not engaged. The court therefore concluded the Judge's decision was not unjust and dismissed the appeal.

• Nature of application: appeal against a winding up order and an application for adjournment.
• Issues decided: validity of service; whether it was inappropriate to make a winding up order at a directions hearing in the company's absence; whether the judge's decision involved a serious procedural irregularity.
• Reasoning: valid service to registered office under Companies Act s1139 and Insolvency Rules/CPR; judge properly exercised discretion in light of limited evidence of a real dispute, long delays and lack of evidence of solvency; adjournment refused.

The appeal is dismissed. The judge's decision to make the winding up order was not unjust because of a serious procedural irregularity: service of the order fixing the hearing to the company's registered office was effective under section 1139 of the Companies Act 2006 and the Insolvency Rules/CPR; the judge had properly considered the evidence, the company had long had opportunities to challenge the liability orders but produced no sufficient evidence of a genuine dispute or of solvency, and accordingly the exercise of discretion to wind up rather than adjourn was within bounds.

Petition heard in the ICC leading to a winding up order by ICC Judge Prentis on 8 July 2019; prior hearings included 18 December 2017, 13 February 2019 and 20 March 2019 (order dated 20 March sealed 7 May 2019). The company pursued judicial review of the magistrates' court decision which failed and permission for judicial review was refused in August 2019. Permission to appeal to the High Court was granted by Trower J (order that the Official Receiver be served) and the appeal was determined in the High Court (Chancery Division) by Mrs Justice Falk [2020] EWHC 545 (Ch).