Neutral Citation Number:
[2003] EWHC 1145 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts
of Justice
The Strand
London WCA 2LL
Thursday, 1st May 2003
B e f o r e:
__________
MR COOK appeared
on behalf of the Applicant.
MR FRANCIS appeared on behalf of the Respondent.
__________
The procedural history of this matter is rather melancholy and, although the issue is apparently important to the parties, the amounts of money involved are not very substantial. Nonetheless, the issue is not entirely easy to resolve satisfactorily and fairly between the parties.
I gave an earlier judgment in the matter when it was first before me on 22nd July. It concerns an application by Highwood Consultants Limited ("Highwood") to injunct Accurate Controls Limited ("Accurate") from petitioning for Highwood's winding up. The petition would be based on the contention that Highwood owes Accurate a sum of money in excess of £750.
Highwood specialises in the production of a synthetic wood product. It was interested in expanding its market and was contemplating a joint venture with a South African company in 2001. A meeting took place in July 2001 between representatives of Highwood and Accurate, and some sort of arrangement was entered into between the two companies. It was envisaged that an application would be made to BIS, a Government-sponsored entity encouraging investment in South Africa, and which gives grants in connection with such potential investments. An application to BIS was duly made by Accurate in Highwood's name, signed by Highwood, on 24th July 2001. There is no doubt that the grant was formally confirmed by a letter from BIS, dated 27th September 2001, but there is evidence on behalf of Accurate, from Mr McClure, a director and chairman of Accurate, that prior oral approval was given by Mr Gallagher, the BIS scheme manager, on 6th September 2001.
The contention before me on 22nd July on behalf of Accurate was really two-pronged. First, that Highwood had agreed with Accurate that Highwood would pay Accurate's expenses incurred in relation to the preparation of a report on the proposed venture. In the alternative, if it was not so agreed, Accurate was entitled to recover its expenditure on a quantum meruit or unjust enrichment basis. In light of the evidence before me at that time, I concluded that Highwood had a bona fide argument to the effect that there was no agreement to the effect that Highwood would pay Accurate's expenses. However, I held that Accurate was entitled to recover the expenditure it had incurred on an unjust enrichment basis, albeit limited to that expenditure which it would have been able to recover under the grant. I held that the nature and the lateness of the evidence was such that it was not sensibly possible for me to decide how much, if anything, could safely be held to be owing, and in particular whether more than £750 could be said to be owing, on this basis.
In those circumstances, the hearing of 22nd July resulted in me granting a temporary injunction restraining Accurate from presenting a winding-up petition, but that was subject to Highwood providing an affidavit dealing with its case in detail, and if the affidavit was not served in time then the injunction was to be lifted. The matter was to be re-listed for hearing before me, if possible before the end of term.
The matter came before me on 18th November 2002, by which time evidence had been put in, but Accurate had not put in evidence that it should have put in and I gave directions for further evidence, namely to the effect that Accurate should put in further evidence, and that Highwood should put in any further evidence in reply thereto. I also ordered Accurate to pay Highwood's costs on an indemnity basis.
The matter now comes back before me today, with further evidence having been put in. As I hope will be clear from the order for costs I made on 18th November 2002, the villains of the piece at that stage, in terms of failing to file evidence in time, was Accurate. Today the villains of the piece, in terms of evidence, is Highwood. It has not filed any evidence in accordance with my direction, but seeks to rely upon "Guidance notes given for BIS investments study grants", a document which could and should have been exhibited to the witness statement and served in accordance with my directions at the last hearing. It also wishes to rely upon an e-mail from a person employed by BIS, the Contract Team Leader of the Africa Group, Mr Kevin Drury, recording when the grant in question was approved. This put Mr Francis, who appears on behalf of Accurate, in considerable difficulties because he did not know this evidence was in existence or was sought to be relied on. Realistically, he does not apply for an adjournment, because the last thing I am going to do in this case is grant yet another adjournment on what should be a summary matter. Equally realistically, he does not invite me to refuse to look at the evidence.
The sums which Accurate say they would be entitled to recover can be divided, in principle, into a number of parts. Firstly, there is £2,067.68 based on money incurred on a trip to South Africa between 25th July and 7th August 2001. Secondly, there are sums incurred on a trip to South Africa between 8th and 20th or 23rd September 2001 (depending on the individual). Thirdly, there is expenditure incurred on a trip to South Africa between 1st and 21st February 2002. Fourthly, there are the sums incurred in relation to an African business access study. Fifthly, there are sums incurred in relation to the Djibouka business advisors. Sixthly, there is a sum which one might call other incidental expenses.
So far as the first category of sums is concerned, Mr Francis accepts that now that the guidance notes have bee produced, there is a real argument open to Highwood to support the proposition that sums incurred, at any rate before 6th September 2001, are irrecoverable. That is because the guidance notes say in terms:
Costs incurred prior to approval of an application are ineligible for grant support.
I think that is a realistic concession, and so the first category goes. I do not say that on the facts of this case, at a full hearing, in normal proceedings, Accurate would not be able to show that that provision should not apply to the first category of sums, but I certainly cannot say, to put it at its lowest, that Highwood has no case here. Indeed, it seems to me on the face of it at the moment a very strong case.
The second category of items is a little more difficult. On the face of it, all the sums were incurred after 6th September but before 27th September. There is nothing in the documentation, whether the guidance notes or otherwise, to suggest that the approval has to be in writing. On two occasions in sworn evidence Mr McHughes has said that approval was given to the grant by a responsible senior person at BIS on 6th September, albeit orally. Nowhere up to now has that been denied. There is now a denial in the very last minute e-mail, which does not appear to come from somebody who was involved in the matter at the time. The e-mail merely says:
The application was approved on 27th September 2001.
There is no reason to think that is anything other than based on the document from BIS, recording approval.
I further note that the detailed application for approval made it clear that expenditure was going to be incurred from early September 2001. When the approval came through from BIS in writing on 27th September 2001, it appears to have extended to the great majority of the sums, including sums stretching back to early September 2001.
One has to be very careful before one finds in favour of a person seeking to present a winding-up petition. There has to be a case which would satisfy Part 24 of the CPR. One has to bear in mind not merely the facts but also the facts that could have been put before the court on behalf of each side, and the history of the matter. In my judgment, bearing in mind the factors that I have mentioned, this second category of items is, in principle, recoverable.
So far as the figures in the second category are concerned, they amount to £6,010.43. Almost two-thirds of that figure is attributable to club class flights, some £3,713. I think that there is enough concern in my mind not to allow those sums in full, although I think that Accurate will have a justifiable sense of unfairness in light of that. Nonetheless, it is made clear in the guidance notes (which, as I say, were only seen today by Accurate) that only "reasonable travel costs" were allowed and "Economy class if available". I accept that economy class may not have been available, but I think it would be wrong to assume that that was the case in relation to these flights. I cannot in all conscience say, unlike in relation to the second category generally, that it is right to think that Highwood's case is hopeless, or, to use more modern language, there is no reasonable prospect of Highwood establishing that these sums were not reasonably incurred or that second class flights were not reasonably available. I think it is a bit of an indulgence to Highwood, but I am prepared to make it. One has to make something of an adjustment here. I cannot believe that two flights to South Africa would be less than £600, particularly as one of the flights includes 11 nights' accommodation. So I propose to reduce the £3,700 to £600.
So far as the other figures are concerned, I do not think the objections to the taxis are reasonable, because taking the train would presumably have taken more time and might well have involved an overnight hotel. As for the other figures, there is no reason for attacking them, except in relation to some of the food items representing entertaining more than food for those travelling. So they should be reduced by one-third where there are three people, or by a half where there are four people. There is also the point (which I will come back to) that the hotel stays involve some laundry and possibly private telephone calls.
So far as the third category is concerned, it seems to me, for the reasons I have given (subject to the point about hotel bills including an element of laundry and of private telephone calls), that the figures cannot fairly be attacked.
In connection with these figures, the fact that certain sums may to a limited extent be attacked by Highwood does not mean that one doubts all the figures. That would not be fair. I accept that in some cases it might be shown that some of the invoices presented by a claimant are so dubious, unreliable, or dishonest that it makes one doubt all the rest of the invoices. There are cases where that is fair comment, but I do not think it is fair in many cases, and this is one, to say that because some doubt, particularly in a last-minute way, has been cast on some of the figures, one should therefore reject all the figures as being hopeless.
The aggregate figure for the second and third categories is £6,010.43 plus £1,772.45, which roughly adds up to £7,782. In light of the deductions to which I have referred, I think it is right to take off £ 3,200, namely £3,100 for the club class flights and about £100 for the food for entertaining. If I take off another £500 to allow for laundry and telephone calls, that must be positively generous. Rounding down the resultant figure to £5,000 produces £2,500 because, of course, BIS only pay half the outgoings. Therefore the first, second and third categories justify to my mind a payment of £2,500.
The fourth category, the Africa business access study, resulted in a figure of £2,000 for which Accurate was liable. I do not see why it should not recover £1,000, namely the BIS half figure for that. After all, as Mr Francis has shown, it is something which was specifically to be included within the funding under the BIS grant. The fact that the firing gun may have been given for this work to start in advance does not seem to me, realistically, to be something which justifies Highwood taking the prematurity point. It is specifically included in the grant, and the invoice was only actually served, and therefore liability arose, later.
The same sort of consideration applies to the Djibouka business advisors. Some £835 is asked for, of which one again has to take half, which leaves £417. I see no reason to think that, merely because the invoice was sent rather late, in August 2002, it should be treated as not having been incurred during the relevant period. If the applicant, Highwood, wishes to establish that work was done later, which seems to me a fanciful idea, they could have put in evidence to establish it. There has been plenty of time. It seems to me overwhelmingly likely that it was done in accordance with what the parties envisaged. That results in a figure of £3,917.
As to the last category, in the sum of £200, I do not quite understand it and I do not propose to allow it, tempting though it is, because it would round it up to £4,000 odd. So I am going to round down the figure to £3,900.
I have a final observation to make before turning to precisely what I propose to do. It is pretty odd for the court on a petition to go through figures in this way. If all this had been served up properly to me right at the beginning it may well be that I would have sent it off to the County Court, as Mr Cook suggests should be done, but I think on this occasion I am actually giving the applicant, Highwood, an indulgence. On the face of it, until it produced the guidance notes, almost all these sums, it would seem to me, were really unassailable. It is true that a prematurity point was raised at the very beginning, but I dealt with it in my judgment and the only reason it can really be raised again is because of the guidance notes. On the one hand, it is unsatisfactory for the Companies Court to be required to go through invoices in the way I have, saying "Yes" to this and "No" to that, and "I am going to dock off something here" on another. On the other hand, it is quite wrong, where money is plainly owed by a company and the amount owed is plainly over £750, that muddying of the waters should prevent a petition being presented. On the facts of the present case, where there is this last minute evidence, which really has enabled the company concerned to reduce the amount owing significantly, it would be unjust if I was not to give it some relief today.
The course I would like to take is to say that if Highwood pay Accurate within say 14 days -- possibly 7 or 21 days, and I am open to submissions, but within that sort of period -- the sum of £3,900, and something possibly by way of costs, the injunction is continued. If Accurate wish to recover more they can go to the County Court. If, on the other hand, £3,900, possibly plus costs, is not paid within that period, then the injunction is lifted. That is the order I have in mind.