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	England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Secretary of State for Business, Innovation and Skills v PLT Anti-Marketing Ltd [2015] EWHC 3981 (Ch) (04 December 2015) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2015/3981.html Cite as: [2015] EWHC 3981 (Ch)

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IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
MANCHESTER DISTRICT REGISTRY

		Manchester Civil Justice Centre 1 Bridge Street West Manchester M60 9DJ
		4 December 2015

JUDGE HODGE QC:

1. This is my extemporary judgment on a public interest winding-up petition presented by the Secretary of State for Business, Innovation and Skills against PLT Anti-Marketing Limited under petition No 3376 of 2013.
2. On the present application the Secretary of State is represented by Mr David Mohyuddin (of counsel) and the company is represented by Mr Adam Deacock (also of counsel).
3. The application presently before the court is an application issued by the company on 26 November 2015 seeking an order: (1) that the company be wound up by the court on the grounds that it is unable to pay its debts and that it is just and equitable that it be wound up; and (2) if the court considers it necessary, that the petition be amended accordingly. The court is also asked to dispense with any further service, advertisement or verification of the petition or to make such other directions as it thinks fit. It is also asked to make provision for the costs of the application and of the petition.
4. In support of that application the company relies upon witness statements of (1) Mr Kevin Lee Thurston, the sole director of the company, dated 25 November 2015; and (2) Mr Graham Eaglesham, the financial manager of the company, dated 20 November 2015.
5. The Secretary of State has not filed any evidence on that application and responds by way of submission through Mr Mohyuddin’'s written skeleton and the oral submissions that he has made to me this morning.
6. It is necessary to put this present application in context because the proceedings on the Secretary of State’'s petition have a long and convoluted history. The company carried on business selling the purported service of preventing unwanted telephone sales calls and junk mail. It mainly recruited its customers by “"cold-calling”" during which customers were required, so the Secretary of State says, to make an immediate decision whether to purchase PLT’'s services.
7. As amended, the Secretary of State’'s petition seeking the winding up of the company on the grounds that such is in the public interest set out the following grounds for winding up: First, it was said that the company had engaged in misleading sales practice in order to induce the public to enter into contracts for services and had subsequently failed to provide the services in accordance with representations made. Particulars are set out at paragraph 33 of the petition.
8. Secondly, it is alleged that with the intention of inducing members of the public to enter into contracts, the company represented to them during unsolicited telesales calls (in which the company required an immediate transaction or decision to be taken) that the company was in some way backed or endorsed by the Government by using phrases such as “"the UK data controllers”" and “"we work to Government legislation”" or words to similar effect. It is said that the company thereby claimed to be approved and/or endorsed and/or authorised by a public body when it was not. That is said to be an unfair commercial practice, prohibited by the Consumer Protection from Unfair Trading Regulations 2008 and/or EC Directive 29/2005. It is also said that by requiring an immediate transaction or decision to be taken the company was also guilty of misleading actions contrary to consumer protection legislation and directives.
9. A third ground for winding up is said to be that the company had traded in breach of the Consumer Protection Distant Selling Regulations and also in breach of undertakings which had been provided to a trading standards authority. Those undertakings had required the company explicitly to inform customers of what the company did; explicitly to explain who the anti-marketing group was when cold-calling customers; and promptly to provide customers with durable cancellation rights following a distance contract for its services. It is said that the company failed to comply with those undertakings.
10. A further ground for seeking to wind up the company was said to be that the company had traded in a manner which frustrated its customers’' ability to exercise their contractual and legislative rights to cancel their contracts with the company, as further particularised at paragraph 39 of the petition. It was also alleged (at paragraph 40) that the company had retained financial details for its customers in circumstances where there was no ongoing business requirement to do so.
11. The Secretary of State also asserted that the company’'s trading was a continuation of objectionable sales practices previously carried out by a company, Satellite Protection Services Ltd, of which persons involved with the present company had previously been directors, and which had been wound up in the public interest on the petition of the Secretary of State. The company has filed and served limited evidence in response to those allegations but has said that it wishes to rely upon further and additional evidence to be served hereafter.
12. The petition has had a lengthy procedural history. Having been presented on 30 April 2013, on 2 May 2013 the Secretary of State applied without notice for the appointment of a provisional liquidator. That application came before me and I adjourned it for notice to be given to the company and granted injunctive relief in the interim, protecting records relating to the company’'s past, present and future customers.
13. The further hearing of the application for the appointment of a provisional liquidator took place before me on 7 May. The company gave undertakings preventing the payment of remuneration in any form to officers or shareholders and undertook that the company would not make sales unless certain requirements were complied with. On that basis, and with the injunctive relief over the databases continuing, the application was further adjourned to 13 May and directions were given. At that adjourned hearing the undertakings were renewed and extended so as to require the company, in advance of making sales, specifically to advise customers that the company would register their details with the telephone and mail preference services and that such services were free services otherwise available to customers individually. On that occasion the court recorded that the matter was suitable for a speedy trial. I note with some irony that that “"speedy trial”" is still some time in the future.
14. On the basis of those undertakings, the application for the appointment of a provisional liquidator was adjourned to the trial of the petition, with permission to the Secretary of State to restore it on three days’' notice. The injunctive relief over the databases was continued, and directions were given. The costs of all of those hearings were reserved to the hearing of the petition.
15. At the end of October 2013 there came on before me for hearing an application by the company to vary the undertakings that had been given in relation to the prior notification to customers of the availability for free of registration with the telephone and mail preference services. I dismissed the application to vary the undertakings and refused permission to appeal. I gave directions, including directions for the exchange of evidence on the petition and for trial.
16. With the permission of Floyd LJ, the company appealed my refusal to vary the undertakings to the Court of Appeal. Before the appeal could come on for substantive hearing, the Secretary of State had renewed his application for a provisional liquidator on the basis that undertakings given by the company had been breached. Whilst finding that the company had breached undertakings, Judge Bird refused to appoint a provisional liquidator and he made no order as to costs.
17. The hearing in the Court of Appeal finally came on in January 2015, and the Court of Appeal handed down judgment on 10 February. The appeal was successful in part in the sense that the Court of Appeal held that I should not have determined issues as to breach of Consumer Protection Regulations as a preliminary issue, but should have left that matter over to trial. Nevertheless, I was held to have been correct to have refused to allow the undertakings given to the court to be varied. Various costs were directed to be costs in the petition.
18. On 2 March 2015, following on from the Court of Appeal’'s judgment, I gave directions, including permission to the Secretary of State to amend the petition. At some stage after that order, former directors of the company became subject to criminal proceedings. As a result, the company applied for a stay of 28 days after the service of the prosecution evidence in the criminal proceedings and/or an extension of time to serve its evidence in answer to the amended petition until 56 days after service of the prosecution evidence.
19. Ultimately, and on a date which unfortunately does not appear from the order itself, Judge Bird gave directions for the further conduct of the petition. His directions related to requests for further disclosure and then required the company to file and serve its evidence in response to the amended petition by a date in November 2015. I understand that that time has since been extended by agreement. Paragraph 8 envisaged that the amended petition should be listed for trial on the first available date after 31 January 2016 with an estimated length of ten days, although if the parties formed the view that that estimate was too long they were to inform Chancery Listing without delay. Given the existence of the criminal proceedings which I understand are coming on for trial early next year, it seems to me clear that any hearing of a contested petition is not going to take place before the spring of next year.
20. The application presently before the court by the company is, as I say, to wind up the company on the grounds that it is insolvent and unable to pay its debts as they fall due. It is therefore said to be just and equitable for the company to be wound up. In his witness statement, Mr Thurston relates that the company has been unable to sell since shortly after the presentation of the petition at the end of April 2013 and its income has gradually declined over the 30 months that the petition has been outstanding. As the company’'s sole director, Mr Thurston has taken the view that it would now be impossible to restore the company’'s business and that it should cease to trade. The company’'s bank account was closed by its bank on 9 November at 2015. The lack of new sales, and the cost of this litigation, are said to have taken a significant financial toll on the company and Mr Thurston believes that it is unable to pay its debts. He relies upon the financial information supplied by Mr Eaglesham. That indicates that the company is insolvent to the extent of a sum of between £287,000 and £320,000. Now that the decision has been taken to cease trading, Mr Thurston has concluded that the company is irretrievably insolvent because it will not realise the book value of its fixed assets and many of the current assets, in particular inter-company debts and directors’' loans, are likely to be irrecoverable. Mr Thurston concludes at paragraph 15 of his witness statement as follows:

“"In all of the circumstances it is clear that the Company is irretrievably insolvent with a substantial liability outstanding to its landlord. I would add that I understand that the Secretary of State opposes a voluntary liquidation of the Company but I am unable to understand any reason why he might oppose a compulsory winding up order which is the same relief he is seeking himself. I consider that it is in the best interests of the Company and its creditors for the Company to be wound up now. The petition has been advertised in the London Gazette and I am advised that no further step needs to occur before an order is made. I therefore respectfully request the Court to order that the Company be wound up.”"

21. Mr Deacock submits that the company is clearly unable to pay its debts and as such should be wound up under the Insolvency Act. Given the insolvency of the company, its interests are to be judged as being those of the body of its creditors. Mr Deacock submits that it must be in their interests for the company to be wound up because no possible benefit can accrue to creditors if the winding-up of the company is to be deferred. Bearing in mind that the company ought to be wound up, Mr Deacock submits that the court should make an order now rather than deferring it to a subsequent hearing. He submits that that would be in accordance with the overriding objective and, in particular, the need for a case to be dealt with justly and at proportionate cost. He reminds me of CPR 1.1(2), which applies to proceedings under the Insolvency Act since it is not inconsistent with the Insolvency Rules. That provision provides that dealing with a case justly and at proportionate cost includes, so far as is practicable, ensuring that the parties are on an equal footing; saving expense; dealing with the case in ways which are proportionate; ensuring that it is dealt with expeditiously and fairly; allotting to the case an appropriate share of the court’'s resources while taking into account the need to allot resources to other cases; and enforcing compliance with rules, practice directions and court orders.
22. If an order is not made today but is deferred until after a full trial, Mr Deacock says that there will be unnecessary delay; the company will be exposed to a trial which it simply does not have the resources to fight, and where it would not even be fighting on an even footing with the Secretary of State, resulting in consequent unfairness; a contested trial will take up unnecessary time and court resources; and the Secretary of State will not, after such a contested trial, be able to obtain any relief other than that which the court is now being invited to grant, namely the making of a compulsory winding-up order.
23. On the issue of jurisdiction, Mr Deacock submits that since there is already before the court a winding-up petition, namely that presented by the Secretary of State, the court must have the necessary jurisdiction to wind up the company. He makes the points that the company itself is a party which would be entitled to petition for winding up; but since there is already an extant petition he submits that there can be no need for a further petition. Mr Deacock also submits that the court has the power on hearing a winding-up petition to make any order it thinks fit under section 125 of the Insolvency Act and that must comprehend an order that the company be wound up on grounds other than those stated in the petition. Mr Deacock submits that the court has jurisdiction to make a winding-up order even if a valid petition has not been presented. Reliance is placed, first, on the judgment of Neuberger J (as he then was) in the case of Lancefield v Lancefield [2002] BPIR 1108. That was the case of the winding-up of an insolvent partnership; but Mr Deacock submits - in my judgment correctly - that that involves no difference in principle. As the headnote makes clear, Neuberger J held that the court had jurisdiction to wind up a company of its own motion and despite the absence of a petitioning creditor. Although such jurisdiction was to be exercised only in very exceptional cases, in the instant case Neuberger J considered that the urgent need to protect the interests of creditors, the conclusions of a receiver that the company was insolvent and unsaleable, and the absence of any conceivable opposition to the exercise of the jurisdiction made it appropriate to make a winding-up order.
24. At page 1110 Neuberger J said that he had no doubt whatsoever that if he had the jurisdiction to make a winding-up order that day he should do so. He considered that, first, if it was going to happen the sooner a winding-up order was made the better. Secondly, it was clear that subject to one individual establishing the necessary level of debt he could obtain a winding-up order, so there was little point in incurring further costs and delay if an order could be made there and then. Thirdly, it was difficult - indeed to Neuberger J’'s mind impossible - to envisage any grounds upon which a winding-up order would be opposed by anyone entitled to object, and if a ground were to be advanced the judge could not see how it could succeed. The business was one which, in the light of the large number of individuals who had potential claims against it, and who had been prejudiced by the present situation, should be in the hands of an independent third party as soon as possible. The business was one whose affairs should be sorted as soon as possible. It was a business whose goodwill, if any, had been leaking, or even rushing, away and the sooner it was sold if it had value the better. The business was one where it was quite impossible to envisage the two groups of partners letting the other wind it up or agreeing on winding it up together.
25. At pages 1111 to 1113 Neuberger J set out the basis of his reasoning on the issue of whether the court had jurisdiction to wind up a company or partnership in the absence of a petition. He was clear that if a person sought to wind up a company then that person must present a petition. However, he did not see why that should mean that where a matter concerning the company was before the court, and the court was quite satisfied that there was jurisdiction to make a winding-up order because one or more of the circumstances in section 122(1) applied, the court was in every case powerless to act simply because nobody had petitioned for the winding-up under section 124(1). Neuberger J said in terms that he did not see why, in the case of a registered company, the court should not, in an appropriate case, of its own motion decide on the facts before it that it had power to make a winding-up order under section 122(1) and that it should make such an order. Having said that, Neuberger J proceeded to say that he thought it would require what he described as a “"thoroughly exceptional case”" before the court would even consider making a winding-up order in relation to a company where there was no petition. He said:

“"It would be plainly undesirable if parties to litigation thought that there was, in normal circumstances, even a real possibility of the court, of its own motion, at the risk of prejudicing people who were not before the court, making an order winding up a company. In virtually any case where the possibility of a winding-up order is to be considered...”"

it seemed to him to be clear that the court should require a properly presented petition. Neuberger J continued:

“"However, there will be circumstances in which a petition will not be necessary because the circumstances are so plain, and the inevitability, appropriateness and urgency of a winding-up order are so clear, that it would be a denial of justice, and a waste of time and money, for the court to refuse to make an order there and then.”"

26. Neuberger J concluded that in the circumstances, and what he described as “"the very exceptional facts of this case”", it was right to take a course which normally would be quite inappropriate, namely to make a winding-up order without there having been a petition. On the instant facts, the judge thought this unusual course was justified. Indeed, he thought it his duty to make such an order given that he had jurisdiction.
27. That decision was followed by His Honour Judge Behrens, sitting in the Leeds District Registry of the Chancery Division, in the case of Re BTR (UK) Ltd, Lavin v Swindell [2012] EWHC 2398 (Ch), reported at [2012] BCC 864. I was taken to the whole of the relevant passage from Judge Behrens’'s judgment at paragraphs 72 through to 75. In the latter paragraph, Judge Behrens concluded that there was power to make a winding-up order, but it was a power to be exercised cautiously and in an exceptional case. The power in the case before Judge Behrens was held to be conferred by paragraph 55(2)(e) of Schedule B1 to the Insolvency Act 1986 (as amended) relating to the powers of the court in an administration.
28. Those two authorities were considered by Honour Judge Purle QC in the case of Marches Credit Union Ltd [2013] EWHC 1731 (Ch) in the Birmingham District Registry. In that case the decision in Lancefield v Lancefield was applied to the case of an industrial and provident society. Judge Purle held that he had jurisdiction to proceed to make a winding-up order even if a petition had in some way been vitiated by the absence of the consent of all the de jure directors. In his judgment, the facts of that case justified him in acting under the court’'s inherent jurisdiction. However, at paragraph 8 Judge Purle stated that Neuberger J had emphasised in the Lancefield case that very exceptional facts were required to justify the court acting of its own motion. Subsequently, in re BTR (UK) Ltd Judge Behrens, following Lancefield, was said to have made an immediate winding-up order without requiring the presentation of a petition in circumstances where creditors had approved of the compulsory winding up of the company then in administration, but the administrator, lacking funds, had been unwilling to make that application himself.
29. The matter was subject to further consideration by Judge Purle in the case of John Harlow (acting as administrator of Blak Pearl Ltd) v Creative Staging Ltd [2014] EWHC 2787 (Ch). In that case counsel had referred Judge Purle to earlier decisions of Harman J in the case of Brooke Marine Ltd [1988] BCLC 546 and Synthetic Technology Ltd which is said to be [1900] BCLC 378 at 382 although the year of the report must be inaccurate. At paragraph 46 Judge Purle recognised that the decisions in Lancefield v Lancefield and in BTR (UK) Ltd had been decided without reference to the two previous decisions of Harman J, where he had held that a winding-up order could only be made on a properly presented petition. Judge Purle said that the later decisions in Lancefield and BTR (UK) Ltd were now established (at least at first instance) and it would not be appropriate, in Judge Purle’'s judgment, for him sitting at first instance to depart from them now.
30. That is significant because Mr Mohyuddin relied before me upon Harman J’'s decision in re Brooke Marine Ltd and, in particular, the view expressed by that experienced Company Court judge at page 547 between letters E and H that there was no power to make a winding-up order where there was no petition for winding up before the court. Harman J said in terms that in his view the proposal for the making of a winding-up order simply on an application (which is what we have in the present case) could not be correct. As I say, Judge Purle declined to adopt that approach, preferring to follow the later decisions in Lancefield and BTR (UK) Ltd as representing the present practice of the court.
31. Mr Deacock submits that the circumstances are exceptional here because the company is plainly insolvent and wishes to be wound up, and also because a petition has already been presented and advertised. Rather than requiring a petition to be issued and advertised, the court can simply make a winding-up order. In the course of his oral submissions, Mr Deacock emphasised that there is only one type of compulsory winding-up order. He submitted that there was no difference in the nature of the relief which the company was inviting the court to grant when compared with the winding-up order sought on the Secretary of State’'s petition. As Mr Mohyuddin pointed out, paragraph 45 of the petition concludes with the averment that in the circumstances it is just and equitable that the company be wound up. It was not contested on the evidence that the company was insolvent. Why, Mr Deacock rhetorically asked, should the company not be wound up now since it is plainly insolvent and it is only arguably in the public interest for it to be wound up on that ground? It was clear from Lancefield that in exceptional circumstances the court could wind up a company without there being any petition before the court. Here there was in fact such a petition seeking the winding-up of the company on the just and equitable ground. The decision of Judge Purle in Harlow v Creative Staging Ltd confirmed that the jurisdiction enjoyed by the court to make a winding-up order in the absence of any winding-up petition still exists and was not effected by Harman J’'s earlier decision. Mr Deacock asked rhetorically: does the fact that there is an arguable case to wind up the company on public interest grounds amount to a reason why the court should not make a compulsory winding-up order on the grounds of the company’'s undoubted insolvency? The case for winding up on public interest grounds was merely arguable, whilst the case for winding up on the grounds of insolvency was indisputable.
32. All of the authorities relied upon by Mr Mohyuddin said no more than this; that the court would make a compulsory winding-up order even if the company in question was already in voluntary liquidation or was dormant. The only prejudice of acceding to the company’'s application to wind itself up on the grounds of insolvency was that the Secretary of State would not be able to make out his case for winding up on public interest grounds at trial and would not therefore be able to publicise the basis of the winding-up order as being founded upon the public interest. In the light of the previous history of this case, including a reported judgment in the Court of Appeal and the existence of related criminal proceedings, nothing, so Mr Deacock submitted, was to be achieved by the publicity attending the making of a winding-up order on public interest grounds. The court was not presently in any position to make a finding that the company had been acting contrary to the public interest. It would be an unreasonable waste of time, and of the court’'s resources, to purse the Secretary of State’'s extant petition to trial. Mr Deacock pointed out that no trial was as yet even listed. It would be just and equitable to wind up the company now and it would not be in the public interest for there to be any further delay or expenditure on legal costs.
33. In his written skeleton argument Mr Mohyuddin had submitted that the procedural basis for the company’'s application to have itself wound up on the grounds of its insolvency was entirely opaque. He submitted that there was a complete absence of any jurisdictional basis for the company’'s application. The Secretary of State’'s public interest petition had been presented on the basis that it was just and equitable to wind up the company by reason of the grounds set out in the petition. Even though the company did not admit the allegations against it, in the absence of evidence in opposition to the amended petition it was highly likely that the grounds advanced would be made out at trial. Once they were, they were said to weigh in the balance against any contrary factors in deciding whether it was just and equitable to wind the company up. Given the absence of any opposition, it was said that the scales were tipped firmly in favour of making a compulsory order on the Secretary of State’'s amended petition.
34. There was said to be no jurisdictional basis to grant the relief sought. The amended petition included no allegation of insolvency and the Secretary of State did not wish to re-amend his own petition. There was said to be no basis for the Secretary of State to be required to re-amend so as to include an allegation that the company wished to be made against itself.
35. Mr Mohyuddin submitted orally that there was no jurisdiction to make a winding-up order in the present circumstances. If there were, there were not the exceptional circumstances in the present case which would justify the exercise of that jurisdiction. Why, Mr Mohyuddin asked, should the court not proceed on the basis of the petition as presently drawn? The Secretary of State did not ask the court to wind up the company on the grounds of insolvency. There was said to be no basis upon which the Secretary of State could be required to amend his petition, and paragraph 2 of the application notice seeking such an order was therefore a nonsense. Section 125(1), which provides that “"on hearing a winding-up petition the court may dismiss it, or adjourn the hearing … or make an interim order, or any other order that it thinks fit”" could not empower the court to direct the Secretary of State to amend his petition.
36. The case of re Brooke Marine Ltd was authority for the proposition that if one wanted a winding-up order one had to present a winding-up petition. The case of Lancefield v Lancefield and the authorities following it did no more than establish that in a thoroughly exceptional case, and when it was inevitable that the court would make a compulsory winding up order and there was no prejudice to anyone not before the court, then the court might make a winding-up order even though there was no extant winding-up petition. The BTR case was said to take the matter no further. The decision was in terms founded upon paragraph 55 of Schedule B1 to the Insolvency Act. It was simply an example of the court making a winding-up order in exceptional circumstances.
37. Mr Mohyuddin emphasised the statement at paragraph 75 of Judge Behrens’'s judgment that the power to make a winding-up order was one to be exercised cautiously and in an exceptional case. Lancefield v Lancefield was such an exceptional case because there was going to be a vacuum. The case of Marches Credit Union Ltd was an exceptional case because the company was not only insolvent but its assets were at risk. Judge Purle (at paragraph 8) had referred to Neuberger J’'s emphasis in the Lancefield case that “"very exceptional facts were required to justify the court acting of its own motion”". The exceptional facts present in the Marches Credit Union case were identified by Judge Purle at paragraph 9 of his judgment. The only active directors had resolved upon a winding up and had petitioned the court. They had done so with the support of relevant regulatory authorities. The objective was to introduce an orderly means by which investors in the Union could be paid out what was due to them in the immediate future, avoiding an unseemly scramble. That was recognised as being very much in the public interest. In the present case there was said to be no jurisdiction to make a winding-up order, and even if there was, the jurisdiction was one which could only be exercised in very exceptional circumstances which were not present in the instant case. There was no potential vacuum in terms of company control; there was no risk to creditors. The winding-up petition had been presented on solid grounds. It had been contested by the company throughout. Mr Mohyuddin emphasised that the real purpose of the application by the company was to avoid adverse findings on the petition for the personal benefit of the individuals involved, or formerly involved, in the company.
38. Given the evidence of Mr Thurston, it was unclear why the company did not simply submit to a compulsory order being made on the Secretary of State’'s amended petition. Looking below the surface however, it was clear that the only persons who could conceivably benefit from avoiding any finding that the grounds in the amended petition were made out were the director and former directors and other officers of the company, who might find themselves the subject of directors’' disqualification proceedings, and who were presently the subject of a criminal prosecution. Mr Mohyuddin submitted that it was improper for the director and officers and former directors and officers to attempt to resist the amended petition for their own personal benefit. There was therefore said to be no reason at all for the company to attempt to obtain a compulsory order otherwise than on the Secretary of State’'s amended petition.
39. Given that the petition was being contested by the company, delay and costs were the unfortunate but inevitable result. The court should not accede to the application because to do so would send a message to the public that it was possible for directors of a miscreant company to avoid a winding-up order on public interest grounds because of the company’'s intervening insolvency. Mr Mohyuddin referred to a number of authorities which he said established that there was a public interest in the public being able to see that having investigated a company, the Secretary of State considered it appropriate that the company should be wound up in the public interest and that the court had agreed with that conclusion. Mr Mohyuddin said that either the existing petition should proceed on a contested basis or the company should elect to withdraw its opposition to the petition and allow a compulsory winding-up order to be made. The only reason for the court making a compulsory winding-up order on the grounds of insolvency was because the company refused to accept that the petition in its existing amended form should no longer be defended.
40. In his reply, Mr Deacock submitted that a number of the submissions made by Mr Mohyuddin took the matter very little further. There was clearly jurisdiction to make a winding-up order in the present case and the question was whether it was appropriate to exercise that jurisdiction. Exceptional circumstances were said to exist in the present case. The company, in resisting the petition, had been prevented from trading and, as a result, it now found itself insolvent. All parties were in agreement that the company should be wound up. If the company was entitled to contest the winding-up petition on public interest grounds, it should not be bullied out of persisting in its defence. It was certainly in the commercial interests of creditors for the company to be wound up now, but that was not to be equated with saying that it was in the public interest for the company to be wound up on the grounds advanced by the Secretary of State in his amended petition. The fact that the company was now insolvent did not mean that the Secretary of State’'s allegations should be treated as true if they were not true before the advent of insolvency. Mr Deacock submitted that the court had the necessary jurisdiction to make a winding-up order and it was appropriate for it to do so. The company had decided that it was unable to trade further and it was therefore in the interests of the company and its creditors for the court to make a compulsory winding-up order today.
41. At the end of Mr Deacock’'s reply I raised the issue of costs. As was apparent from my recital of the various costs orders, various costs have been reserved to the hearing of the petition. Mr Deacock suggested that the appropriate course was to leave it to the liquidator to decide whether the company should pursue any application for costs against the Secretary of State. The company should be given permission to apply for costs against the Secretary of State. That was a loose end that was unlikely to be pursued further; but the court should not pre-empt the decision of the liquidator.
42. On that issue, Mr Mohyuddin submitted that the company could not be allowed to have its cake and eat it. If the Secretary of State was to be denied the opportunity of establishing his case at trial that it was in the public interest for the company to be wound up, then the corollary of making an order today on the application of the company was that there should be no question of the company being entitled to any order for costs against the Secretary of State, who should be entitled to his costs out of the company’'s assets. An analogy was drawn with the practice on the making of an administration order where there was a creditors’' winding-up petition pending. The usual practice in such a case was to award the petitioning creditor his costs out of the company in the course of administration.
43. Those are the competing submissions. I am entirely satisfied that I have the necessary jurisdiction to make a winding-up order in the present case. I have no doubt that in the light of the authorities, and in particular the decision of His Honour Judge Purle in the case of Harlow v Creative Staging Ltd, where all the relevant authorities were considered and Judge Purle concluded that it would not be appropriate to depart from Lancefield and BTR (UK) Ltd, notwithstanding the earlier decisions of Harman J. I have no doubt that I should follow and adopt that approach.
44. Indeed, the present case is much clearer in my judgment because there is an extant winding-up petition. True it is that it is presented by the Secretary of State on public interest grounds, but it seeks the winding up of the company on the just and equitable ground. In my judgment, that is sufficient to found jurisdiction in the court to make a winding-up order if the court is satisfied that it is just and equitable that the company should be wound up.
45. Mr Mohyuddin submits that the jurisdiction should not be exercised because the circumstances are not exceptional. In my judgment the requirement for exceptional circumstances, formulated by Neuberger J in Lancefield v Lancefield and repeated in later authorities, must be considered in the light of the reasons given for the requirement in the first full paragraph at page 1112 of the report of Lancefield v Lancefield. The requirement for a “"thoroughly exceptional case”" is related to the undesirability of making a winding-up order in circumstances where there is no extant petition seeking that remedy. In my judgment a “"thoroughly exceptional case”" is not required where there is an extant winding-up petition.
46. Assuming, however, that I am wrong in that, then it seems to me that this is as “"thoroughly exceptional”" a case as that in Lancefield v Lancefield itself. This is a case where there has been a winding-up petition on foot now for some two and a half years. During that time the company has become insolvent, its business has come to an end, and the sole director can see no prospect of it ever resuming trading. The life of the company is clearly at an end. Some two and a half years ago the Secretary of State took the view that the direction of the company should be taken out of the hands of its then directors and assigned to a responsible independent third party in the person of the Official Receiver as provisional liquidator. The court refused the application to appoint a provisional liquidator, but it did so only on undertakings from the company’'s directors as to its future manner of trading.
47. Now the company is longer trading it seems to me that it is imperative that an independent third party is appointed to assume responsibility for the company’'s affairs. As Neuberger J said (at the end of the first paragraph) on page 1112 “"there will be circumstances in which a petition will not be necessary because the circumstances are so plain and the inevitability, appropriateness and urgency of a winding-up order so clear that it would be a denial of justice and a waste of time and money for the court to refuse to make an order there and then”". In my judgment this is precisely such a case, although there is a winding-up petition already before the court.
48. I acknowledge that the Secretary of State will not be able to establish the public interest grounds on which he presented his petition. However, the public will, as a result of this judgment, be aware that the Secretary of State had considered that circumstances existed which justified the institution of winding up proceedings on public interest grounds. They will know that the Secretary of State has taken steps to pursue that petition, and has sought to continue to do so even in the face of the company’'s insolvency. It seems to me that this judgment will be sufficient vindication of the Secretary of State’'s eagerness to enforce the public interest, even though for reasons outside his control it is not now possible for him to make good his case at trial. I am of course not in a position, as Mr Mohyuddin expressly acknowledged, to make any findings on the merits of the Secretary of State’'s case, save to say that it was certainly an arguable case, as Mr Deacock himself accepted. The public will know, as a result of this judgment, that the Secretary of State takes his responsibilities in enforcing the public interest extremely seriously.
49. The consequence of a compulsory winding-up order will be that the public can rest assured that the matter will be properly investigated by a court-appointed liquidator. There is no reason why he/she should not pursue the matter in relation to the present director or former directors if he/she considers it appropriate to do so. For that reason, it does seem to me that it is appropriate for the court to include a provision that if the Secretary of State chooses to obtain a transcript of this judgment, then it should be done so at the expense of the company in liquidation as an expense of that liquidation.
50. So far as costs generally are concerned, it seems to me that if it is the company that is taking the initiative in preventing a trial on the merits of the Secretary of State’'s winding-up petition, then it must inevitably follow that there can be no question of the company pursuing any future order for costs against the Secretary of State. That is the price the company has to pay for bringing an early conclusion to this matter. Equally, it seems to me that the Secretary of State must be entitled to his costs of the petition as an expense of the liquidation. It is the Secretary of State’'s petition that has acted as the catalyst for the winding-up order, and the Secretary of State should have his costs accordingly.
51. If those costs are considerable, it is because of the history of this matter. A speedy trial could have taken place in September 2013 or thereabouts. That it did not do so is due to the attitude taken by the company. I do not criticise the company for that; but it would be wrong for the Secretary of State to be penalised in costs as a result.
52. So for all of those reasons, expressed perhaps at too great length, I will make the usual compulsory winding-up order. The Secretary of State’'s costs of the petition will form part of the costs of the liquidation, and those costs will extend to the costs of obtaining any transcript of this extemporary judgment. That, in my judgment, should be sufficient to demonstrate the assiduity with which the Secretary of State pursues what he considers to be the public interest.
(Further argument)

JUDGE HODGE QC:

53. Mr Deacock rightly identifies that it may be appropriate to distinguish between the costs of the petition generally and the particular costs of this application by the company to wind itself up. He points to the fact that that application has been strenuously resisted and that such resistance has not been attended with success.
54. Mr Mohyuddin points out that it would have been necessary for this application to be brought before the court in any event. It was not open to the Secretary of State to consent to the winding up of the company on grounds other than those contained within the petition. Mr Mohyuddin submits that as a result no separate treatment should be accorded to the costs of this application.
55. In my judgment that is right. The court needed to be satisfied, first, that it had jurisdiction to make a compulsory winding-up order; and, secondly, that the circumstances were sufficiently exceptional to justify adopting that course. The court has been assisted by the submissions of the Secretary of State in that regard. I am satisfied that I have heard full adversary argument.
56. I have also made it clear that the court has been precluded from adjudicating upon the merits of the Secretary of State’'s case by the supervening change of circumstance and the fact that, due to the company’'s insolvency, there is simply no good ground for a contested petition to continue, given that this company should be wound up on any view of the facts and merits. In those circumstances, it seems to me that there is no good ground for distinguishing between the costs of and occasioned by this application and any of the other costs of the petition. So I decline to accede to Mr Deacock’'s perfectly proper invitation for me to differentiate between the costs of the instant application and the other costs of this litigation generally.