Having authorised an enquiry under section 447, the Secretary of State presented a winding-up petition of the respondent, an authorised dealer in securities. The company had been obliged to cease trade by its regulatory body. The judge held that the public interest did not require the company to be wound up as it had ceased to trade anyway.
Held: The judge had erred. There was a balancing exercise. If the company had still been dealing in securities, it would be just and equitable that it should be wound up. Did the fact that the company ceased to carry on that business immediately before the petition was presented make a crucial difference? It did not.
Nicholls LJ said: ‘In considering whether or not to make a winding-up order under sec. 122(1)(g), the court has regard to all the circumstances of the case as established by the material before the court at the hearing. Normally that will involve the court, faced with a petition presented by a creditor or a contributory, considering primarily the conflicting interests and wishes of the opposing parties to the petition, whether creditors or contributories or the company itself. The court will consider those matters which constitute reasons why the company should be wound up compulsorily, and those which constitute reasons why it should not. The court will carry out a balancing exercise, giving such weight to the various factors as is appropriate in the particular case. In principle the exercise to be carried out where the petitioner is the Secretary of State is the same. The only difference lies in the nature of the reasons being put forward by the petitioner for the making of a compulsory winding-up order.’
Nichols LJ discussed the position in public interest winding up petitions: ‘The court’s task, in the case of so called ‘public interest’ petitions, as in the case of all other petitions invoking the courts winding up jurisdiction under section 122(1)(g), is to carry out the balancing exercise described above, having regard to all the circumstances as disclosed by the totality of the evidence before the court. In respect of all such petitions, whoever may be the petitioner, the court has to weigh the factors which point to the conclusion that it would be just and equitable to wind up the company against those which point to the opposite conclusion. It is to the court that Parliament has entrusted this task in all cases. Thus where the reasons put forward by the petitioner are founded on considerations of public interest, the court, if it is to discharge its obligation to carry out the balancing exercise, must itself evaluate those reasons to the extent necessary for it to form a view on whether they do afford sufficient reason for making a winding up order in the particular case.
In the case of ‘public interest’ petitions, the court will, of course, carry out that evaluation with the assistance of evidence and submissions from the Secretary of State and from other parties. When doing so the court will take note that the source of the submissions that the company should be wound up is a government department charged by Parliament with wide ranging responsibilities in relation to the affairs of companies. The department has considerable expertise in these matters and can be expected to act with the proper sense of responsibility when seeking a winding up order. But the cogency of the submissions made on behalf of the Secretary of State will fall to be considered and tested in the same way as any other submissions. His submissions are not ipso facto endowed with such weight that those resisting a winding up petition presented by him will find the scales loaded against them.’
Judges:
Nicholls LJ
Citations:
[1989] 5 BCC 244, [1989] BCLC 345
Statutes:
Coompanies Act 1985 122(1)(g) 447
Jurisdiction:
England and Wales
Cited by:
Cited – In the Matter of the Supporting Link; In the Matter of the Insolvency Act 1986 ChD 19-Mar-2004
The Secretary of State sought the winding up of the company. Directors offered undertakings as to their future behaviour.
Held: The Court should be slow to accept such undertakings unless the Secretary consented. The company was solvent, but . .
Cited – Rodencroft Limited, W. G. Birch Developments Limited, H-M Birch Limited; Simon Allso v The Secretary for State for Trade and Industry ChD 23-Apr-2004
The Secretary of state sought the winding up of the companies saying it was expedient in the public interest to do so. A shareholder opposed this saying that the companies were solvent.
Held: The shareholder had, in the absence of any position . .
Cited – Secretary of State for Business, Innovation and Skills v Doffman and Another ChD 11-Oct-2010
The defendants applied for directors’ disqualification proceedings for the claim to be struck out or dismissed on the ground that the respondent had breached their rights to a fair trial under Article 6 of the European Convention on Human Rights . .
Lists of cited by and citing cases may be incomplete.
Company
Updated: 26 July 2022; Ref: scu.196719