MR JUSTICE HART: This is an appeal against a decision of Mrs Registrar Derritt made on 16^th July this year, the reasons for which were handed down in a written form on 6^th August of this year, whereby she refused to extend the time for an application for rescission of a winding up order pursuant to Rule 7.47(4) of the Insolvency Rules 1986.

The history of the matter is fraught with mishaps of various kinds and it is necessary for me to set it out in some detail. I am assisted in doing so by a chronology which has been helpfully prepared for my assistance by Miss Stubbs, who has appeared on behalf of the respondents, the Commissioners of Customs & Excise. Unhappily the papers otherwise in relation to this appeal have been presented to the court in a thoroughly indigestible way since those responsible for preparing the appeal bundle chose, for whatever reasons, to exclude from it the evidence which was in fact before Mrs Registrar Derritt but that omission has been supplied by those instructing Miss Stubbs. In addition, for reasons which I explained in the judgment given earlier today I, subject to a limited exception, refused the applicant’s leave to adduce additional evidence on this appeal.

The story begins with a revocation by the Customs & Excise of its approval to the company, Oakwood Storage Services Ltd, of its bonded warehouse status. That took place in November 2001 as a consequence of which the company’s trade as a bonded warehouse was brought to an end, a fact recognised by Ouseley J when he had to consider in the late Autumn of 2001 an application by the company for permission to seek judicial review of the revocation of the approval. That application was unsuccessful but in the course of it, I am told that Ouseley J recognised that the statutory machinery available for the company to challenge the withdrawal of the approval, namely the obtaining by the company of a review decision by the Commissioners followed by an appeal against such a review decision to the Tribunal, inevitably took so long that the company’s trade as a bonded warehouse would be fatally injured as a consequence. In particular, it is submitted to me today by Mr Andrew Young, who has appeared on behalf of the company, that the effect was exacerbated having regard to the fact that the disruption in the trade occurred over the period immediately prior to Christmas, a period which is generally the best period in the company’s trading cycle.

The application for permission to seek judicial review was unsuccessful and the Commissioners on their subsequent review upheld their original decision and the company duly appealed to the VAT and Duties Tribunal in relation to that withdrawal of approval. It also appealed at about the same time in relation to an assessment which had been raised against it in respect of a failure to discharge an Administrative Accompanying Document (“AAD”) and procedurally it appears that those two appeals proceeded together before the Tribunal during the course of 2002.

A consequence of the company’s ceasing to trade or a consequence of the revocation of the approval was, according to the evidence filed before Mrs Registrar Derritt, that the Customs in fact took over the premises from which the company had been trading and again, according to that evidence, advised the directors not to attend upon the premises or otherwise they would be subject to arrest.

Whether in connection with that or whether as a result of that or not, it does not appear, those in control of the company’s affairs, while keen to pursue their remedy in the Tribunal, were not equally astute to look after the corporate affairs of the company, since they allowed the registered office of the company to remain at the premises to which they no longer had access and they allowed a situation also to arise under which the company was struck off the register on 5^th June 2002, presumably for failure to comply with some statutory requirement as to returns. Again the evidence, or at any rate the evidence to which I have had my attention drawn, does not indicate the precise reason for that striking off.

It appears that there was failure by the Customs in relation to the proceedings before the Tribunal to comply with procedural requirements imposed by the Tribunal in connection with the appeals, in consequence of which an unless order in those proceedings came to be made which itself was not eventually complied with, with the result that, I am told, the Tribunal allowed the company’s appeals and in that connection, made an order that the Customs should pay the costs of the appeal. It is not entirely clear when the order to pay the costs was made but it is accepted on behalf of the Customs that the consequence of the Tribunal’s order was to give rise to a liability by the Customs to the company in respect of the company’s costs of the appeal. At one point in the correspondence it appears that the Customs were taking a point that that liability would not extend to any period of the appeal during which the company had not been on the register, unless and until at any rate that it was restored to the register, but nothing, I think for present purposes, turns on that.

The position then was that in February the Customs were acknowledging to the company a liability to pay costs in respect of the appeal. However, it would appear, probably because the left hand of the Customs was not fully conscious of what the right hand was doing, that the Enforcement Division of the Customs found itself in a position where an assessment to Value Added Tax had been raised on the company in respect of the period January to April 2002. That being an estimated assessment, no return by the company having been made for that period and, be it noted, that being in respect of a period in which the bonded trade of the company could no longer have been being lawfully carried on.

The position thus was that during February, a correspondence was being carried on between the Customs and the company, represented for this purpose by its VAT consultant, a Mr Curly, in relation to the company’s liability to pay costs and at the same time, Customs was sending a letter before action to the company at its registered office in respect of the sums due on the assessment. That letter before action was followed very quickly on 25^th February by the presentation of a petition based on the assessment, namely an assessment in the sum of £18,304. The petition was served on 4^th March 2003 by a process server who purported to serve it at the registered office of the company, namely the building from which it had previously, but was no longer, trading. The petition was advertised on 19^th March and on 9^th April the company was restored to the register, which was one of the items of relief sought by the petition, and then wound up.

In the meantime, in connection with the correspondence that had been contemporaneously going on between the Customs and Mr Curly in relation to costs, the directors of the company had been taking steps through the company’s accountants, O’Connor & Co, to have the company restored to the register. This was all done in complete ignorance of the fact that a petition had been presented for the restoration of the company and its winding up. The application made by the directors to restore the company to the register was made on 12^th March 2003 and was granted by Registrar Jaques by an order of 25^th April 2003.

At about the same time but probably a little earlier, it appears that the Insolvency Service communicated to one of the directors of the company, Mr Duffield, advising him of the winding up order and inviting him to attend for interview. Following that, it appears that Mr Lowe, who is the director of the company who has principally been the deponent on the company’s behalf in connection with the application before Mrs Registrar Derritt, became aware of the existence of the winding up order and of the petition on which it was based.

However, no application was made to rescind the winding up order until some date in June 2003 when the application was made which in due course came before Mrs Registrar Derritt on 16^th July 2003. That application sought, as it had to do, an extension of the period of time under Rule 7.47(4) of the Insolvency Rules 1986 which provides that:

As I have indicated, Mrs Registrar Derritt took the view that she should not in the circumstances extend the time under that Rule. It is submitted on behalf of the appellant that in coming to that conclusion she misdirected herself. The grounds upon which it is said that she misdirected herself, however, appear to go not to the question of whether there was a proper excuse for the delay, which undoubtedly took place between the discovery by the directors of the making of the winding up order and the making of their application for its rescission, but to whether the winding up order ought ever to have been made in the first place.

The first point which is taken is that the petition had not been properly served having regard to the provisions of Insolvency Rule 4.83(c) which require that a petition should be:

Before me the proposition has been put in a different way by Mr Young, who did not appear below, who has submitted that there was not, as a matter of law, good service of the petition since even if the evidence of the process server was accepted, the fact of the matter was that it must have been known to the Customs, if one accepts the evidence which was before Mrs Registrar Derritt as to their control of the premises at that time, that any notice served in the way in which it was served would not in fact come to the notice of any of the directors or anyone acting on their behalf at the time and, therefore, would not comply with the requirements of the Rule.

So far as that point is concerned, it was a point which was not argued before Mrs Registrar Derritt and does not appear to me to be technically a good point so far as service is concerned because it assumes that there can have been no arrangements put in place by the directors to ensure that documents served on the company at its registered office would come to their notice. It does not seem to me that the evidence establishes that there was any reason for either the Commissioners or any other creditor to suppose that the directors had not made suitable arrangements to ensure that corporate correspondence and other documentation arriving at the registered office would be properly dealt with. Perhaps more especially in the light of the fact that it must have been, at any rate by the time at which the directors were alerted to the fact that the company had been dissolved and that they would need to apply to restore it to the register, that getting the company’s affairs into a proper shape was a matter of very high priority.

The second point taken by Mr Young is that the Registrar attached too much weight to the service of the petition and the failure of the directors to respond, given that they were not aware of the petition until after the winding up order was made and that she failed to direct herself to the question as to whether the directors could be criticised for not responding to the letter before action or ensuring a defence to the petition. Those points do not seem to me to be valid criticisms of the reasoning of the Registrar who, as I have indicated, plainly seems to have accepted that the directors did not in fact know of the service of the petition and thus did not in fact know of the letter before action. As I have said, she accepted that.

It is true that she commented to the extent that their lack of knowledge was as a result of their own failure, either to make arrangements for the registered office to be changed or to make proper arrangements for communications to the registered office to be passed on to them, that was their own fault. But I cannot really see how that can be a matter of criticism of the Registrar’s decision. Plainly it was their own fault or at any rate a matter wholly within their control and control of those whom they chose to instruct to assist them in complying with their statutory obligations.

A further criticism is that the Registrar failed to take account of the fact that there was in place a bond upon which the Commissioners could have drawn to satisfy the liability created by the assessment and that the Registrar ought to have paid greater attention to the fact that in reality the Commissioners were a secured and not an unsecured creditor. Upon that platform, Mr Young sought to build a further edifice, namely that the Commissioners’ duty to act with proportionality as a public authority ought to have led it not to petition for the winding up of the company but rather to have sued the company in debt in respect of the assessment. For myself, I cannot really see the logic of that submission at all since there is no reason to suppose, given that on this hypothesis the company would never have known about any such action until it was too late or a consequence petition founded on it, it could really have made any difference at all.

Then it is said that the Registrar was incorrect in saying, as she did at paragraph 8 of her recital of the facts of the case, that the company’s appeal to the VAT Tribunal had been in respect of the AAD assessment when in reality it had also been in respect of the withdrawal of authorisation. It is correct that the Registrar was wrong in what she says in paragraph 8 insofar as she implies that the only appeal to the VAT Tribunal was the AAD assessment appeal. However, I cannot myself see that this incorrect finding of fact played any material part at all in the decision which she made.

Immediately following the finding in this respect is the further conclusion that the Commissioners’ liability to the company in costs, as a result of the appeal having been allowed, was likely to be in a sum greater than the petition debt. She was therefore accepting, at any rate at that point in her judgment, that the Commissioners were probably indebted to the company in a sum greater than that in which the company was indebted to them, so far as the petition assessment was concerned. That appears indeed to be an entirely correct finding since the correspondence indicates that while the company was opening its mouth considerably more widely than the Commissioners were prepared to offer in respect of costs, they were prepared to offer a sum in respect of costs and irrecoverable VAT on those costs of some £36,000.

The significance, according to the company, of the misdirection is, they say, that had the Registrar appreciated that the company had been successful in its appeal against the withdrawal of authorisation, it would have been obvious or more apparent to her that the company, as a result, had a substantial chance of obtaining damages against the Commissioners as a result of what is described before me as the Commissioners’ unlawful withdrawal of authority. However, whether or not the company has any such cause of action seems to me to be largely irrelevant to what Mrs Registrar Derritt had to consider, given her acceptance of the fact that on any view, so far as the petition debt itself was concerned, there was allowed a counter liability on the Customs & Excise, as yet unascertained, but when ascertained likely to exceed the petition debt.

She seems, therefore, to have been perfectly alive to the fact that had the application to rescind been made within time, the application would, to use a vernacular expression, have had legs because it would have been possible for the company to say that had it appeared on the petition, it would have been at least able to persuade the Registrar at the initial hearing of the petition that there was a dispute as to the debt and a substantial chance of persuading the court in due course that the Commissioners’ debt was outweighed and extinguished by the cross grain in respect of costs on the part of the company and that therefore, the outcome of the petition would or should have been different.

However, the task which the Registrar set herself to consider was not what would have been the result had the company been in a position to contest the petition, but whether, the company not having been in that position, she should extend the time beyond the seven days given by the Rules. She correctly held that she had a jurisdiction to extend that time but on the facts of the present case, held that she would not do so. Those facts are set out by her in paragraphs 4 and 5 of her judgment and then are returned to at paragraphs 12, 13 and 14.

The analysis of the dates involved takes one from the time at which the company through its directors, Mr Lowe and Mr Duffield, discovered the existence of the winding up order in mid April 2003 to the time, it is not clear exactly when, but in early or mid June, solicitors on their behalf actually issued an application to rescind the order. Putting it very briefly, the period until early May was occupied with first the company’s accountants, O’Connor & Co, and later their VAT consultant, Mr Curly, seeking to obtain information both from the court and from the Customs as to the contents of the petition and the assessment on which it was based.

The particular reasoning of the Registrar appears in paragraphs 12, 13 and 14 where she says:

In relation to that, Mr Young criticised the Registrar for having first of all complained that the correspondence was not before her and then for having said that even if it had been, she could not see how such correspondence could assist. However, I am unable to accept that there is any criticism of the Registrar to be made in this respect. I too have not been shown the correspondence and it was not included in the additional evidence which the appellant sought to introduce. Moreover, even from the description of it which I was given by Mr Young, who was as I understand it, obtaining his instructions as he spoke from Mr Curly, I too fail to see how it assists. The fact of the matter is that during the whole of that period any idea that the directors might have had of what had happened was simply made as a result of an unfortunate mistake is not supported by the correspondence. Even if it were, it does not itself provide an excuse for not having made an application timelously to rescind the order.

The fact of the matter is that there was a long period of delay in applying for the order. It may well be that the directors thought that that period of delay would not matter, but it cannot be said from any evidence which has been placed before the court that they were encouraged in any way to think that, either by the liquidator who is necessarily concerned in this matter, or by the petitioning creditors, the Customs & Excise. The fact of the matter is that the time limit in 7.47(4) is put there for the very good reason that a winding up order necessarily affects more persons than simply the petitioning creditor and the company itself. It has long been the case that for that reason, the court is extremely guarded in the exercise of its jurisdiction to review or rescind a winding up order and has always insisted on very strict time limits for the making of such an application.

It seems to me that what the Registrar was concluding in her decision not to extend the time limit was simply that no sufficient reasons had been given of a particularly exceptional character to justify the very considerable extension of time which she would have had to have given had she acceded to the application before her. That, it seems to me, was a matter for her discretion and I have not been satisfied that she took matters into account or failed to take matters into account or otherwise misdirected herself in the exercise of that discretion. Accordingly, I would dismiss the appeal.

I should say that I am entirely conscious of the fact that had the application been made timelously, it is quite possible that it would have been successfully made and I do not think that any of the comments which Mrs Registrar Derritt makes in relation to the merits, had she come to a different view on extension of time, infected her view of whether it was right in the circumstances to extend the time. I am also conscious of the underlying thesis of the directors in making this application and indeed in having pursued the appeal to the Tribunal that the consequence of the winding up order has not been simply to ensure that the Commissioners are paid what is owing to them, but will have the practical effect of stifling an action which otherwise would have been brought in the name of the company against the Commissioners for damages in relation to the withdrawal of the authorisation.

However, so far as such an action is concerned, if the injustice which the directors claim to have occurred has in fact occurred, the fact is that the liquidation does not itself make it impossible to redress that injustice. That is a matter for the conduct of the liquidation. However, for the reasons I have given, I think this appeal must be dismissed.