PPF Capital Source Ltd

• Jurisdiction: Ireland
• Judge: Mr. Justice Murray
• Judgment Date: 11 March 2020
• Neutral Citation: [2020] IECA 63
• Date: 11 March 2020
• Docket Number: Record No. 2019/112
• Court: Court of Appeal (Ireland)

BETWEEN/

IN THE MATTER OF PPF CAPITAL SOURCE LIMITED

AND

IN THE MATTER OF THE COMPANIES ACT 2014

[2020] IECA 63

Whelan J.

Power J.

Murray J.

Record No. 2019/112

THE COURT OF APPEAL

CIVIL

Winding up – Company – Annulment – Director of company seeking to annul winding up order – Whether it was appropriate to grant the relief claimed

Facts: On 30 July 2018, PPF Capital Source Ltd (the company) was wound up by the High Court pursuant to the provisions of the Companies Act 2014. Mr Fennell was appointed Liquidator. He was replaced as Liquidator by Mr Kirby pursuant to an Order of the High Court (O’Moore J) of 9 December 2019. The winding up order was made on foot of a petition presented by Global Management Solutions Ltd. Global alleged that it was a creditor of the company. Mr Stamp was one of the two then directors of the company. Its sole shareholder was Galaxy Funding Foundation. Mr Stamp advised the Court that this was a Belize entity established by him. He contended that he was unaware of the Petition until the Petition documents were received by him in the post at his home in England, on 3rd August 2018. They were posted there by the service providers who operated the company’s registered office on 26 July. This appeared to have been seven days after the Petition was received by those agents. The Petition itself was dated 22 June and was presented to the High Court on 3 July. By the time the papers were received by Mr Stamp, the winding up order had been made. Mr Stamp thereupon issued a notice of motion seeking to annul the winding up pursuant to s. 669 of the 2014 Act. That application was grounded upon three affidavits sworn by him, the first of which was sworn on 29 August, it being supplemented by affidavits of 31 August 2018 and 8 October 2018. Global responded to the application via two affidavits sworn by Mr Boulton on 1 October and 18 October. The application came for hearing before the High Court (Pilkington J) on 31 January 2019. Pilkington J refused the relief. Mr Stamp appealed to the Court of Appeal against that order. Mr Stamp’s essential case was that the Petition was grounded on a contrived and disputed debt. He said that this debt was thus used as part of a strategy to frustrate proceedings brought by the company against a Mr Singh in the High Court in London.

Held by Murray J that he would accede to the application to annul the winding up order. He believed that Mr Stamp had provided an adequate explanation for his failure to attend the original winding up hearing. Murray J was satisfied that had Mr Stamp done so he would have made a case consequent upon which the company would not have been wound up. Murray J believed that the allegation Mr Stamp made in these proceedings went beyond the mere claim that the debt on foot of which the Petition was pursued was disputed on bona fide grounds, but that he had laid before the Court credible evidence supporting his contention that the winding up of the company was undertaken for ulterior purposes which, if established conclusively in evidence, would represent an abuse of the process of the Court; those allegations having been made, they had not been convincingly or adequately refuted.

Murray J held that, in circumstances in which neither the original Petitioner nor the Liquidator were opposing the application, in which no other party had been identified who would be prejudiced by this order, and in a context where nothing had been done (consequent upon this application) to move the liquidation along since the making of the winding up order, it was appropriate to grant the relief claimed.

Appeal allowed.

JUDGMENT of Mr. Justice Murray delivered on the 11th day of March 2020

1 On 30 July 2018, PPF Capital Source Limited (‘the company’) was wound up by the High Court pursuant to the provisions of the Companies Act 2014. Mr. Ken Fennell was appointed Liquidator. He was replaced as Liquidator by Mr. Myles Kirby pursuant to an Order of the High Court (O'Moore J.) of 9 December 2019. The winding up order was made on foot of a petition presented by Global Management Solutions Limited (‘Global’). Global alleged that it was a creditor of the company.

2 Mr. Stamp was one of the two then directors of the company. Its sole shareholder was Galaxy Funding Foundation. Mr. Stamp advised the Court that this is a Belize entity established by him. He contends that he was unaware of the Petition until the Petition documents were received by him in the post at his home in England, on 3rd August 2018. They were posted there by the service providers who operated the company's registered office on 26 July. This appears to have been seven days after the Petition was received by those agents. The Petition itself is dated 22 June and was presented to the High Court on 3 July.

3 By the time the papers were received by Mr. Stamp, the winding up order had been made. Mr. Stamp thereupon issued a notice of motion seeking to annul the winding up pursuant to s.669 of the Companies Act 2014. That application was grounded upon three affidavits sworn by him, the first of which was sworn on 29 August, it being supplemented by affidavits of 31 August 2018 and 8 October 2018. Global responded to the application via two affidavits sworn by Mr. Martin Boulton on 1 October and 18 October. The application came for hearing before the High Court (Pilkington J.) on 31 January 2019. Pilkington J. refused the relief. This appeal is against that order.

4 Mr. Stamp's essential case is that the Petition was grounded on a contrived and disputed debt. He says that this debt was thus used as part of a strategy to frustrate proceedings brought by the company against a Mr. Bhupinder Singh in the High Court in London. The background giving rise to this is complex, but the essential facts as alleged by Mr. Stamp are as follows.

5 The company was engaged in the business of undertaking capital markets transactions. Mr. Stamp says that in November 2013 the company entered into an agreement with an entity called Greenmybusiness Limited (now known as Scotmarit Limited) (‘GMB’) pursuant to which PPF paid $1.5 million to GMB for it to procure a $100M letter of credit that PPF could monetise. GMB was controlled by Mr. Singh. The letter of credit was not procured, and the claim is made that Mr. Singh enriched himself by utilising the $1.5M for his own benefit. Mr. Stamp says that this money was supposed to be protected and was the subject of a Quistclose Trust. This transaction and alleged misuse of these funds, is the subject of the proceedings in England to which I have referred. In those proceedings, essentially, the company alleged that Mr. Singh had engaged in an advance fee fraud. Those proceedings have the record number and title ‘Claim No : HC-2016-001088 Between PPF Capital Source Limited, Claimant, and Bhupinder Pall Singh and anor. Defendants'. Since the appeal was first listed in this Court, Mr. Stamp advised the Court, Mr. Singh has entered bankruptcy in the United Kingdom. While this may mean that the proceedings taken by the company against him will go no further, Mr. Stamp intends to pursue recovery of the company's monies insofar as it can from Mr. Singh and to identify how and to whom those monies were ultimately transferred. He contends that the company would have ‘priority’ in the bankruptcy in respect of this claim.

6 The agreement with GMB was followed by a second agreement entered into on 21 January 2014. This was between the company and a separate entity controlled by Mr. Singh – Lyza Limited (‘Lyza’) - whereby Lyza was to procure a $100M letter of credit. I will refer to this agreement as ‘the Lyza agreement’. It was Mr. Stamp's case that no funds were due to Lyza under this agreement until the letter of credit was obtained. $2M was to be paid to this end. Mr. Singh, on the other hand, maintained that the Lyza agreement replaced the GMB agreement and that PPF owed Lyza a further sum of $500,000 to procure the letter of credit. The relationship between the two agreements is relevant to an issue in the case before the English Courts.

7 On 9 May 2018, a Deputy Master of the English High Court refused an application by Mr. Singh for security for costs against PPF in those proceedings. Mr. Stamp places very heavy reliance upon the judgment of the Deputy Master in that application. He adopts the position that the decision of the Deputy Master on this application was helpful to him because, in particular, he says that the Deputy Master considered that the GMB agreement and the Lyza Agreements were largely the same, but with the significant difference that no fee was immediately payable by the company on signing. The statement upon which he relies in this regard appears at paragraph 15 of the Deputy Master's decision:

“… on 21st January 2014 the Claimant entered into another agreement with a company called Lyza Limited controlled by the First Defendant. This is in substance a very similar agreement to the GMB agreement providing for Lyza to procure a letter of credit to the value of $100 million. There was however a significant difference in that no fee was immediately payable by the Claimant. A fee of $2 million was to be payable but only on receipt of a letter from the bank issuing the letter of credit stating that it was ready willing and able to do so.”

Emphasis Added.

8 Mr. Stamp contends that were this the correct characterisation of the agreements, the company could not be said to have owed $500,000 to Lyza.

9 It was Mr. Singh's contention as recorded in the Deputy Master's decision, that the GMB agreement was discharged and replaced by the Lyza agreement. While the Deputy Master was most careful to observe that the Court was not seeking to shut out Mr. Singh from putting forward his case as to what exactly was agreed in this regard, and indeed while he emphasised throughout his decision that all the Court...