HM Revenue & Customs v Egleton & Ors [2006] EWHC 2313 (Ch) (19 September 2006)

HM Revenue & Customs v Egleton & Ors [2006] EWHC 2313 (Ch) (19 September 2006)

The court has jurisdiction to grant freezing orders against third parties in anticipation of a winding up order where the liquidator may have claims against those parties, even if the applicant is a petitioning creditor and not the company or liquidator. However, as a matter of discretion, such orders should...

Source-derived case information.

Citation
[2006] EWHC 2313 (Ch)
Parties
Applicant: HM Revenue & Customs; Respondent: Clayton Egleton; Respondent: Trade Eazy Limited; Respondent: Shaheed Vali; Respondent: Frakhhameed Rahman
Jurisdiction
England and Wales
Judgment Date
19 September 2006
Procedural Posture
Creditors' Winding Up Petition and Application for Freezing Orders / Hearing on Continuation of Freezing Orders Pending Winding Up Petition
Outcome
Freezing orders continued on an exceptional, short-term basis until a liquidator is appointed or further order.
Legal Topics
Freezing Orders (mareva Injunctions), Jurisdiction Over Third Parties, Winding Up Petitions, Fraudulent Trading, Interim Relief
Insolvency Company Law Civil Procedure Freezing Orders (mareva Injunctions) Jurisdiction Over Third Parties Winding Up Petitions Fraudulent Trading Interim Relief

Source-derived case record

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Parties

HM Revenue & Customs

Applicant

Clayton Egleton

Respondent

Trade Eazy Limited

Respondent

Shaheed Vali

Respondent

Frakhhameed Rahman

Respondent

Procedural Posture

Creditors' Winding Up Petition and Application for Freezing Orders / Hearing on Continuation of Freezing Orders Pending Winding Up Petition

Legal Issues

  1. 1 Whether the court has jurisdiction to grant or continue freezing orders against third parties in anticipation of a winding up order where the applicant is a petitioning creditor and the alleged liabilities are to the company or its liquidator, not to the applicant directly.
  2. 2 Whether, as a matter of discretion, such freezing orders should be continued when statutory alternatives (such as appointment of a provisional liquidator) exist.

Ratio Decidendi

The court has jurisdiction to grant freezing orders against third parties in anticipation of a winding up order where the liquidator may have claims against those parties, even if the applicant is a petitioning creditor and not the company or liquidator. However, as a matter of discretion, such orders should generally be sought by a provisional liquidator rather than a creditor, unless cogent reasons exist. In this exceptional case, the freezing orders were continued for a short period due to the imminent hearing of the winding up petition and the lack of practical benefit in discharging the orders only to have them re-imposed by a provisional liquidator.

Court Disposition

Freezing orders continued on an exceptional, short-term basis until a liquidator is appointed or further order.

Orders

  • Continuation of freezing orders against all respondents until the appointment of a liquidator or further order.