Shepway District Council v Regentford Ltd Companies Court, Petition No. 219 of 2005

Winding-up - Council Tax - Appeals Procedure

Sarah Clarke acted for the local authority (S) in a case which raised some tricky problems in reconciling the procedures and decisions of three very different tribunals - the Companies Court, the Magistrates' Courts and the Land Valuation Tribunal.

S presented a winding up petition following non- payment of a statutory demand based on a series of liability orders for council tax arrears. The orders had been granted by Folkestone Magistrates.

The company, Regentford Ltd. (R), initially sought to defend the winding up petition on the basis that the liability orders had been set aside by a statutory declaration at Enfield Magistrates Court on 22nd February 2005. But at trial R's counsel conceded that a statutory declaration was only effective in criminal proceedings in the Magistrates' Court.

Instead R relied on the two remaining grounds. These were that the underlying council tax liability was subject to an appeal at the Kent Land Valuation Tribunal and that R had paid into its solicitor's client account the sum claimed under the statutory demand. R in fact had net assets in excess of £1,200,000 and was not insolvent.

The Registrar decided that, notwithstanding the pending appeal and the granting of the original liability orders without any defence being heard, the Companies Court could neither consider an appeal itself nor hold that the orders were or might have been made unlawfully, or otherwise go behind them.

An appeal against liability orders must be made by way of case stated or judicial review but neither of these steps had been taken by R. Therefore, at the time of the hearing of the petition, there was a debt which R was deemed unable to pay by reason of its failure to comply with a statutory demand for payment. The winding-up petition could not be said to have been an abuse of process and could not be legitimately opposed.

In the light of R's attempts to secure the debt and the evidence of its solvency, the Registrar gave R the option, as an alternative to an immediate winding up order, of having the petition dismissed upon the director undertaking to pay the debt within seven days. R accepted that proposal and an order was made in those terms.