The Commissioners For HMRC v Payroll & Pension Services (PPS Umbrella Company) Ltd
[2024] EWCA Civ 995
The Commissioners for His Majesty’s Revenue & Customs v Payroll & Pension Services (PPS Umbrella Company) Ltd
22 July 2024
[2024] EWHC 1884 (Ch)
High Court
A company was facing a winding-up petition by HMRC, which was dismissed. The judge then had to decide who pays the costs of the company's temporary managers (provisional liquidators). The judge decided that, depending on the outcome of an appeal, HMRC might have to pay the liquidators' fees. Other requests by a company director were mostly refused. Both HMRC and the director were denied permission to appeal the judge's decisions.
Key Facts
- •HMRC presented a winding-up petition against Payroll & Pension Services (PPS Umbrella Company) Ltd, which was dismissed.
- •Consequential matters regarding the provisional liquidators' (PLs') remuneration, expenses, and the discharge of the PLs were considered.
- •A director, Mr Ajibola, sought various orders against the PLs.
- •The court addressed the interpretation and application of Insolvency Rules 2016, Rule 7.38.
- •The court considered the allocation of costs, including the PLs' remuneration and expenses.
- •HMRC sought permission to appeal the dismissal of the winding-up petition and the cost orders.
Legal Principles
Interpretation of Insolvency Rules 2016, Rule 7.38(3) regarding the payment of PLs' remuneration and expenses.
Insolvency Rules 2016, Rule 7.38(3)
Court's discretion in exercising its power under Insolvency Rules 2016, Rule 7.38(4) regarding PLs' retention of company property.
Insolvency Rules 2016, Rule 7.38(4)
Previous case law on the interpretation of similar rules in the 1986 Rules and the allocation of costs in winding-up petitions.
Re UOC Corporation [1998] BCC 191 and Re Secure & Provide plc [1992] BCC 405
The burden of proof lies on the party seeking to depart from the default position under Rule 7.38(4).
Judge's interpretation of Rule 7.38(4)
Options for allocating costs of provisional liquidators, as outlined in *Titan Petrochemicals Group Ltd v Sino Charm International Ltd [2023] CA (Bd) 4 Civ*
*Titan Petrochemicals Group Ltd v Sino Charm International Ltd [2023] CA (Bd) 4 Civ*
Outcomes
The winding-up petition was dismissed.
There was a bona fide dispute as to whether the workers were employed by the company and whether the Fraud Exception applied.
The PLs' remuneration and expenses are to be treated as part of the loss for which compensation may be sought under an undertaking in damages, contingent on the outcome of HMRC's appeal.
This decision balances the interests of the PLs, HMRC, and the company, pending the Court of Appeal's decision on the undertaking in damages.
Mr Ajibola's application for various orders against the PLs was largely refused.
These orders would have infringed the PLs' right of retention under Rule 7.38(4), and some raised issues inappropriate for a consequentials hearing.
HMRC was ordered to pay Mr Ajibola's costs on the standard basis.
HMRC was the losing party, and there was no justification for deviating from the usual principle.
Permission to appeal was refused to both HMRC and Mr Ajibola.
There was no real prospect of success on appeal, as there were bona fide disputes on the key issues.
A limited stay was granted to HMRC, pending the Court of Appeal's decision on whether to continue the stay pending the appeal.
To allow HMRC to seek an expedited decision from the Court of Appeal on the stay.
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