Metrocab and Frazer Nash v Official Receiver & Ors

This is a renewed application for permission to appeal from a decision of Mr Philip Marshall QC sitting as a deputy judge of the High Court. He was considering an application to set aside or rescind winding-up orders made in relation to two companies, Metrocab and Frazer Nash Technologies. It is not in dispute that the winding-up orders were properly made, that is to say, that at the time those orders were made those companies were indeed insolvent. The proceedings had been ongoing for some time. The principal behind the two companies, Mr Siddiqi, must have known that sooner or later the petition for winding up would be heard and determined. By the time those petitions were heard, the money was not there.

The rules provide that it is possible to rescind a winding-up order. Rule 7.47(4) of the Insolvency Rules requires that any application must be made within seven days. The applications in this case were well out of time; in one case four months, in the other three and-a-half months. The Deputy Judge took the view that that was far too late. Explanations were offered as to why it was so late. Essentially, the explanations were that Mr Siddiqi had been seeking funding and had particularly been trying to obtain a contract that he had finally obtained the contract, and that in fact now all would be well.

The judge was not impressed on the facts with that explanation. Mr Willson says the judge was all wrong about that, because if you examine what the judge said about it, he was talking about material that was of the wrong date because it was too early and that the judge should have accepted that the reasons for the delay were reasonable. He also makes the point that as regards one of the alleged debts, that of the landlord’s, the fifth potential respondents, the debt was disputed, on bona fide grounds and should not have been taken into account, and in any event it was unfair that the judge had overlooked the fact that Mr Siddiqi had no records from which the debt could be challenged because they had got destroyed in one way or another.

When the matter first came before me, it seemed possible that at least one of these applications might be saved by a consent order, so I adjourned that to see whether such an order was possible. That was because some of the original opponents had settled or had been paid off. But a consent order was not possible. In the absence of the consent order it is not possible to operate the relevant Practice Direction.

Mr Willson says some of the parties either no longer have any interest or ought to have been taken to have consented, but I take the view that nothing but actual consent counts. Even when you have a consent order, the Court of Appeal may not allow an appeal by consent. The consent route, although it might have been possible, is simply not possible in this case.

That leaves me simply with the original application, based as it is on the suggestion that the judge exercised his discretion wrongly as regards extending time. I cannot begin to think that he exercised his discretion wrongly. The period provided in the Rules is very, very short: seven days. The purpose of the Rules is essentially to deal with some mistake that has been made in the winding up or something that can be put right very quickly such as a sudden influx of cash. The purpose of the Rules is not to allow those behind the company to spend a lot of time trying to raise funds and the like and then come back much, much later, which is what happened here. The rule provides for seven days only because it is vital that once a winding-up order has been made, people know where they stand and can act on it. This is a very, very short period. I know of no other rule that is so short. Periods for appeal are three weeks, six weeks, and so on and so forth. They are not tight as this. The three and-a-half month and four-month periods involved here is simply way too long. I cannot see any realistic prospect of the Court of Appeal interfering with the judgment below.

It might be said that it is all a bit unfair. Mr Siddiqi managed to get everything in order in the end, but I am afraid that was far too late. He had plenty of time in fact to get things in order earlier, not just within the seven days but well before that, because the petition was issued much, much earlier, and presumably there was a statutory demand even before that. I have no doubt that on the first part of the judgment, on the extension of time, the judge was right. It is not necessary to consider the second part except to say that I think there are formidable difficulties there too. I am sorry, Mr Willson, but it is just too late.