Parrot Pay Limited (in liquidation) v Goddington Pierce Limited (in provisional liquidation)
[2023] EWHC 2774 (Ch)
In the matter of C.C.T. Logistics Limited (in liquidation)
30 June 2023
[2023] EWHC 1548 (Ch)
High Court
A company (CCI) tried to unfairly influence a vote in a bankruptcy case by claiming money it didn't actually deserve. The judge decided CCI cheated, threw out their votes, and put a different person in charge to sort things out fairly.
Key Facts
- •Levy & Partners Limited (Applicant) appealed the liquidator's decision to allow CCT International Limited (CCI) to vote on a £51,412.83 debt at a creditors' meeting.
- •The Applicant claimed £43,516.75 from C.C.T. Logistics Limited (the Company) for accounting services.
- •CCI, a company set up by Mr. Murray (a director of the Company), carried on the same business as the Company after Mr. Nash (another director) moved to Spain.
- •The Company entered creditors' voluntary liquidation in July 2021.
- •CCI's proof of debt included the Company's overdraft with Barclays (£34,976.86), Libertas fees (£5,212.20), and other payments made by CCI on behalf of the Company.
- •The Applicant argued that CCI's votes were invalid, particularly concerning the Barclays overdraft, and sought the liquidator's removal.
- •CCI's payment to Barclays was made shortly before the creditors' meeting and votes cast by CCI were instrumental in the Liquidator retaining his position.
Legal Principles
In a creditors' voluntary winding up, votes are calculated according to the amount of each creditor's claim.
Rule 15.31(c) IR 2016
A decision is made by creditors when a majority (in value) of those voting have voted in favour.
r.15.34(1) IR 2016
A decision of the chair is subject to appeal to the court by a creditor.
rule 15.35(3) IR 2016
If a secured creditor fails to disclose a security in a proof, the secured creditor must surrender that security for the general benefit of creditors.
r.14.16(1) IR 2016
The judge forms their own view on whether a claim is established on a balance of probabilities.
Revenue and Customs Commissioners v Maxwell [2010] EWCA Civ 1379
The legal burden is on the creditor to establish the claimed indebtedness.
Karapetian v Duffy [2022] EWHC 1053 (Ch)
Voluntary payments cannot be recovered; there must be an express or implied request from the debtor.
Chitty on Contracts (24th edn) at [32-131]
Upon appointment of a liquidator, the power of company directors ceases.
Section 86 IA 1986
A company's members can only interfere in management by passing a special resolution.
Table A, clause 70, and John Shaw & Sons (Salford) Ltd v Shaw [1935] 2 KB 113 CA
Unjust enrichment requires enrichment, at the claimant's expense, unjustness, and absence of defenses.
Goff & Jones (10th ed) at paras 4.01 and 5.01; Benedetti and Anr v Sawiris and Ors [2013] UKSC 50
Claims in unjust enrichment must fit within established categories or have clear analogues.
Uren v First National Home Finance Ltd [2005] EWHC 2529 and Gibb v Maidstone and Tunbridge Wells NHS Trust [2010] EWCA Civ 678
For a Duomatic resolution to be valid, all shareholders must assent, with full knowledge.
In re Duomatic Ltd [1969] 2 Ch 365 and EIC Services Ltd v Phipps [2004] 2 BCLC 589
Directors can act informally if unanimous; informal acquiescence binds the company.
Charterhouse Investment Trust Ltd v Tempest Diesels Ltd (1985) 1 BCC 99,544 and Runciman v Walter Runciman plc [1993] BCC 223
A debt is provable if it is a liability to pay money, including restitution, even if contingent or future.
Rule 14.1(3), 14.2(1), 14.1(5), and 14.1(6) IR 2016; Re Nortel [2013] UKSC 52
If a decision is reversed or votes are declared invalid, the court can order another decision procedure or make another order.
Rule 15.35 IR 2016
Outcomes
CCI's votes regarding the Barclays overdraft were declared invalid.
The payment was voluntary, not discharging the debt; no unjust enrichment; not a provable debt.
CCI's claim for the Libertas fee (£5,212) was deemed valid.
The payment was a loan made before liquidation, evidenced in contemporaneous documents.
CCI's claims for the Nippon Express payment and other payments were declared invalid.
CCI failed to prove these debts on a balance of probabilities.
Mr. Patel was appointed liquidator in place of Mr. Barnett.
The invalid votes would have resulted in Mr. Patel's appointment; minimizing further costs and delays in a small estate; considering all factors and the conduct of CCI/Mr Murray