Abbey Court Limited v Sarah Johns [2025] EWHC 1446 (Ch)

[2025] EWHC 1446 (Ch)Case No BR-2022-MAN-000041IN THE HIGH COURT OF JUSTICEBUSINESS AND PROPERTY COURTSVenue IN MANCHESTERCOMPANIES AND INSOLVENCY LIST (ChD)Venue Manchester Civil Justice Centre 1 Bridge Street West ManchesterM60 9DJDated: 16 April 2025
Before
HIS HONOUR JUDGE HODGE KCSitting as a Judge of the High Court
Between
SARAH JOHNSRespondent(trading as COSTELLA INSPECTIONS GROUP and COSTELLA GROUP)Legal RepresentationMr Gary Lewis (Counsel) appeared for Applicant, Abbey Court LimitedMr Adrian Mantle (in person) appeared for Respondent, Sarah JohnsApproved JudgmentJudgment date: 16 April 2025Transcribed from 10:44:33 until 11:28:06Reporting Restrictions Applied: No“This Transcript is Crown Copyright. It may not be reproduced in whole or in part other than in accordance with relevant licence or with the express consent of the Authority. All rights are reserved.”Number of folios in transcript 62 Number of words in transcript 4,408His Honour Judge Hodge KC:Date 2025-04-16
[1]This is my extemporary judgment on an application relating to the affairs of Abbey Court Ltd, trading as Abbey Court Solicitors. The company registration number is 08000891. The proceedings are pending in the Companies and Insolvency List in the Business and Property Courts in Manchester under case number BR-2022-MAN-000041. This is an application, formally brought by Miss Sarah Johns, purportedly trading as Costella Inspections Group, to set aside an order that was made by HHJ Pearce as long ago as 13 January 2023 (although the order was only sealed on 11 May 2023).[2]The application was made by the company against Miss Johns following the service of a statutory demand on the company on 28 November 2022. The statutory demand was served by Costella Inspections Group, of which Miss Johns, who signed the statutory demand, described herself as the ‘business owner’. The statutory demand was in the sum of £9,320, said to be due and owing (with interest) in respect of fees due from the company for vehicle inspection reports. There is, in evidence, one such vehicle assessment report, dated 7 March 2019, which purports to have been made by Mr Steven Marshall, on behalf of Costella Group.[3]The statutory demand was in fact addressed, not to Abbey Court Ltd, but to Abbey Court Solicitors Limited. although the statutory demand did quote the correct company name for Abbey Court Ltd. The address given for Miss Johns in the statutory demand was 17 Constance Crescent, Hayes, Kent, BR2 7QH. I will refer to this as ‘the Hayes address’. Following delivery at the company’s registered office of the statutory demand on 28 November 2022, the company sent an email, in the form of a letter before action, to Miss Johns on 9 December 2022. The email was sent to the Gmail address of Costella Inspections, which was the email address given in the statutory demand.[4]The email is at B98 of the Applicant’s hearing bundle. It confirmed receipt of the statutory demand, and asserted that it was defective as it had failed to stipulate the relevant court. The email went on:
“We have made our position clear to you and to the two sets of solicitors that you had write to us previously. Our position remains unchanged and is set out in our previous correspondence, especially our letter dated 18 November 2022. There is clearly a triable issue and a statutory demand is not appropriate. It is not insignificant that you have chosen to ignore all the issues that we have raised in our previous letter before you served a statutory demand. Unless we have received your confirmation that it is withdrawn by 4pm on Wednesday, 14 December 2022, we will apply to the High Court in Manchester for an injunction that you be restrained from any further action as far as the demand is concerned.”
The letter of 18 November, addressed to Costella Group at the Hayes address, is headed ‘Re Insurance Fraud’.[5]In summary, what it alleges is that the company had been induced to accept vehicle inspection reports prepared by a Mr Steven Marshall when, in fact, those reports were being prepared by someone else. I have been told today that they were prepared by Mr Adrian Mantle, who is Miss Johns’s father. Mr Mantle has told me today that he made the reports in the name of Mr Marshall because his name had been rejected as a reliable provider of inspection reports by the insurance industry. He appears to accept that the reports were not being produced by the person who was purporting to produce them. He says that Steven Marshall was his ‘trading style’.[6]Essentially, the Company says that it had been induced to accept the services of Costella Inspections Group or Costella Group by a deliberate misrepresentation. It seems to me also that it might be said that there was a total failure of consideration, because the reports were not in fact produced by the person who was purporting to produce them. In any event, the Company asserted that any debt was disputed in good faith and on reasonable grounds.[7]No undertaking not to present any winding up petition founded on the statutory demand was given. As a result, on 15 December 2022, the Company prepared an insolvency application notice seeking to restrain the presentation of any winding up petition founded on the statutory demand. That was supported by a witness statement of Mr Edward Halsall, dated 15 December 2022. Mr Halsall is a solicitor and a director of the Company. There was a substantial 77 page exhibit (EH1). The insolvency application notice was only issued on 29 December 2022. It was listed for hearing before HHJ Pearce on 13 January 2023 at 10.30am.[8]There is a certificate of service evidencing that the application notice, the witness statement, the exhibit, and a draft order were sent to the Hayes address by first class post on 15 December 2022. There is a further certificate of service evidencing that the hearing bundle, a case summary, and the costs schedule were sent to the same Hayes address by first class post on Tuesday, 10 January. For reasons that are not clear, it would appear that a further copy of the costs schedule, possibly a revised costs schedule, was sent to the Hayes address by first class post on Wednesday, 11 January 2023.[9]The matter came on for hearing before HHJ Pearce on Friday, 13 January. The Company was represented by Mr Gary Lewis (of counsel), who also appears for the Company this morning. The order records that the Respondent, Miss Johns, did not attend, having been put on notice of the hearing and the Applicant’s application. That was no doubt founded upon the certificates of service. The order records that the court considered the Respondent’s statutory demand and the application of 15 December. The operative part of the order provided that the Respondent, Sarah Johns, whether by herself, or through her servants or agents, including corporate entities, was thereby restrained from presenting a winding up petition against the Applicant, or from advertising any such petition. Miss Johns was also ordered to pay the Applicant’s costs, which were summarily assessed, on the indemnity basis, in the sum of £6,149.99.[10]That order does not appear to have been sealed by the court until 11 May 2023. The reasons for that are not apparent from the CE-file for this case. It is clear that a draft order had been filed with the court on the Monday following the hearing, 16 January 2023. Be it as it may, the order was not sealed and issued until 11 May. It was apparently sent by post to the Hayes address by the Company shortly after they had received it.[11]It appears that nothing more happened in the matter until an email of 8 November 2024, timed at 12.51pm. That email was sent by Costella Group, which still recorded itself as being at the Hayes address. The email simply reads:
“Good afternoon, I can confirm we have today commenced legal proceedings for monies owed. Our attempts to settle matters amicably were not seized and therefore we have been compelled to issue proceedings. We look forward to resolving the matter in the courts.”
It is the Respondent’s case that it was as a result of that, that it first became aware of the order of Judge Pearce.[12]Mr Adrian Mantle, who has appeared today on behalf of his daughter, who is on holiday in Italy until late tonight, has told me that none of the letters sent by the Company to the Hayes address had ever been received. It was only as a result of the email indicating the issue of legal proceedings, in November of last year, that Mr Mantle says that Miss Johns first became aware of the existence of the order. The first email to the court came on 9 December 2024. It came from a Mr Steven Mantle, whom I understand to be Miss Johns’s brother, and the son of Mr Adrian Mantle. He described himself as a sole trader, trading as Costella Group.[13]Mr Steven Mantle queried how the order had come to be made. The court responded, after some delay, by email on 7 January 2025. It sent copies of Judge Pearce’s order, together with the certificates of service of the various documents that had been sent on 15 December 2022 and 10 January 2023 to the Hayes address. Mr Mantle apparently telephoned the court on 8 January. It was not until 14 February that the appropriate fee was received at the court office, together with the application notice. The application notice, is that which is presently before the Court. The application notice is signed by Mr Steven Mantle. It purports to be made by the Costella Group against Abbey Court Solicitors Limited. It seeks to set aside Judge Pearce’s order.[14]It would appear that the application notice was referred to Judge Pearce. He directed that the hearing of the application to set aside his 2023 order should be listed for hearing on 7 March 2025. However, it is clear from the CE-file that the court took no action in response to Judge Pearce’s direction. There was then an email on behalf of the Applicant on 17 March, chasing up a hearing date, and also requesting permission to call a witness at the hearing. That was referred to Judge Pearce; and it led him to make a further order on 27 March 2025, which was sealed the following day.[15]Judge Pearce recorded that he had read the application notice of 14 February 2025. He recorded that :(i) The name of the Respondent in the application was different to the name of the purported creditor who had served the statutory demand signed by the Respondent and dated 28 November 2022, and also the Respondent against whom the 13 January 2023 order had been made. (ii) There is no company registered at Companies House with the name given by the Respondent for the Applicant; and (iii) The witness statement included in the Respondent’s application notice was not verified by a statement of truth.[16]It was in light of those recordings that Judge Pearce made the following[17]Apart from the fact that I have not received any skeleton argument on behalf of the Respondent, those directions have been complied with. There is a witness statement from Sarah Johns, although the copy I have is neither dated nor signed by her and thus is not apparently verified by any statement of truth. In her witness statement, Miss Johns confirms that she was previously the owner of the Respondent entity. They were known both as Costella Inspections Group and/or Costella Group:
“We were not at any time incorporated, those were two of our trading styles.”
Mr Halsall has produced evidence that, in fact, there is a company incorporated under the name Costella Inspections Limited. It was originally incorporated by Miss Johns as the sole director and shareholder and the person with significant control. It would appear that Miss Johns resigned as an officer on 20 November 2024, leaving Mr Steven Mantle, her brother, as the sole director.[18]Returning to Miss Johns’s witness statement. She states that they conducted many motor vehicle inspections for the Applicant, following their instructions to assist them in advancing their clients’ accident claims:
“When we were owed substantial sums we requested that they make payment to us, but they failed to do so.”
They accordingly had no option other than to serve them with n statutory demand. Of course, the other option was to sue in the civil courts.[19]The witness statement goes on to state that the Applicant Company is incorporated at Companies House. She refers to an entry on the company’s website referring to them as Abbey Court Solicitors Limited, although she acknowledges that at Companies House the only corporate entity they can find is Abbey Court Limited, with the company registration number that was stated in the statutory demand. There are allegations that the company is in breach of the Companies Act by not making clear what their corporate entity is. She refers to a footer at the foot of their emails which refers to Abbey Court Ltd trading as Abbey Court Solicitors. That, of course, is the style in which the application to restrain presentation of any winding up petition is brought.[20]At paragraph 10, Miss Johns says that following service of the statutory demand, they heard nothing whatsoever, save for the email of 9 December 2022, the terms of which she reproduces. At paragraph 11, she states that:
“At no stage did we ever receive the application. We were not aware of it until Abbey Court referenced it in correspondence in November 2024, which was considerably after the application was dated. We feel that this was only generated after we again chased Abbey Court for payment of our fees in November 2024. Abbey Court are welcome to access our metadata which will prove that no correspondence whatsoever was received from them relative to the hearing date.”
It is the order of HHJ Pearce which they wish to have set aside, as they would most certainly have attended court on the due date had they been informed of it. They are litigants in person. Miss Johns says that she has no idea why the Applicant did not serve them with a copy of their application, nor confirmed that the hearing had been listed.[21]Since September 2024, Miss Johns states that she has passed over ownership of the company to her brother, Steven Mantle. That is why his name appears in the application to set aside. At paragraph 15, Miss Johns says this:
“I would ask that both Steven and my father, Adrian Mantle, who works at the firm as an engineer, be granted permission to speak at any hearing, as they are familiar with matters surrounding this matter and indeed, in my brother’s case, he is now the owner. In any event, I’m not in the country on the date listed for the hearing. By way of proof, I enclose documentation that proves that I booked a short holiday in Italy. Booking date 25 February 2025 and I’m not scheduled to return until late in the evening of 16 April. That is the hearing date.”
There is a detailed witness statement in response from Mr Edward Halsall, dated 9 April 2025. The exhibit to that witness statement runs to over 100 pages.[22]In the circumstances described in her witness statement - although I reiterate that it is not apparently signed - Miss Johns does not appear before me today. The Company is represented by Mr Gary Lewis, who has supplied the Court with copies of both the skeleton argument that he prepared for the hearing before Judge Pearce, and a further skeleton argument prepared for today’s hearing. He has also produced a bundle of three case law authorities. In addition, he has also submitted a draft order.[23]I note that on the court file, there is an email sent by Adrian Mantle, at just after 12 noon last Friday, 11 April. In it, he refers to the correspondence emailed to the court on Friday, 4 April. That, no doubt, is a reference to Miss Johns’s witness statement. He says that in it they explain that:
“… Sarah Johns ceased all connections with Costella Group in September 2024. In addition, we enclose for the court’s attention documentation that proves that in February 2025, Miss Johns booked a holiday in Italy that does not return until midnight today, the date of the hearing. The hearing is, of course, scheduled for working hours, but Miss Johns does not land until many hours later. May we request that if Sarah Johns is still required to give evidence, the case be adjourned? If not, may we ask the court that Mr Adrian Mantle attends and he is empowered to undertake any questions or cross-examination in the matter. It was Mr Mantle who initially agreed terms with the Applicant, Abbey Court Solicitors Limited.”
The court does not appear to have responded to that email.[24]When the matter opened today, Mr Adrian Mantle was present in court, as was Mr Lewis. I explained to Mr Mantle that, on an application to restrain the presentation of a winding up petition, and on any application to set aside any order to that effect, the Court does not hear witness evidence from live witnesses. It deals with the matter solely on the papers. That is because the issue before the Court does not involve the final determination of any dispute. The Court is simply determining whether the asserted debt is disputed in good faith and on substantial grounds. If authority is needed for that proposition, it can be found in the case of Tallington Lakes Ltd v South Kesteven District Council [2012] EWCA Civ 443.[25]I therefore explained to Mr Mantle that the issue before the Court was whether the debt was disputed in good faith and on reasonable grounds. Mr Mantle indicated that the Respondent had had no prior knowledge of the hearing before Judge Pearce. I have difficulty in accepting that apparently three separate letters, sent by first class post, could all have gone astray. There was also the letter sent enclosing the court order in the middle of May 2023, when eventually it was obtained from the court.[26]There is also the surprising feature that, having clearly received an indication from the Company that an application would be made to restrain presentation of any winding up petition, the Respondent never queried whether such an application had been made, or what was happening in the matter. Equally, there is the fact that, having served a statutory demand, no steps were taken to pursue it until about November of this year, almost two years later; and even then, so it would appear, through the medium of litigation, rather than the invocation of the insolvency jurisdiction.[27]Mr Mantle however made the valid point that given the order for indemnity costs against Miss Johns embodied in Judge Pearce’s order, it is perhaps surprising that the Company had made no attempt to enforce that costs liability against her over the past 1½ years. Putting on one side the question whether Miss Johns did have notice of the hearing, the fact however remains that what Miss Johns had to do was to rebut the Applicant’s case that the debt was disputed in good faith and on reasonable grounds. Mr Mantle indicated that Miss Johns would have been able to do that. He explained that he had prepared reports that had been produced to the Company, and for which the Company was liable to pay.[28]I referred Mr Mantle to the form of the vehicle inspection report that was in evidence before the Court. It purported to have been prepared by a Mr Steven Marshall. Mr Marshall’s CV appears in evidence at pages 161 and 162 of the hearing bundle. Mr Mantle explained that it was he who had produced the reports; and he had done so under what he described as a ‘trading name’ because insurance companies would not accept reports from him. It was at this point that I intervened to give Mr Mantle the warning as to the privilege against self incrimination. I was concerned that Mr Mantle is admitting that he had produced reports under a false - or, as he would prefer to put it, a ‘trading name’ - because he knew that those reports would not be accepted by insurers if made in his true name. It seemed to me that that potentially gave rise to criminal liability on his part.[29]Certainly, it is clear to me that the debt on which the statutory demand is founded, which arises out of fee notes or invoices for these reports, is clearly disputed in good faith and on reasonable grounds. No one can expect solicitors to pay for vehicle inspection reports produced by someone operating under a pseudonym, particularly in circumstances where that someone does so because they know that such reports would not be acceptable to insurance companies if the true author of those reports was known to them. It does seem to me, in those circumstances, that any claim to a fee for those reports is the subject of a potential defence on the grounds of fraudulent misrepresentation, or, alternatively, total failure of consideration. Certainly, those are issues that would have to be determined in a venue other than the insolvency court. They are matters which would have to be dealt with in ordinary civil litigation in the county court, having regard to the relatively low value of the claim: less than £10,000.[30]For those reasons, even if I were satisfied that the order of Judge Pearce was made without any notice to the Respondent, it is quite clear that the order was rightly made. If the matter is considered afresh today, it is quite clear that no winding up petition founded upon the statutory demand should be allowed to be presented. There is, of course, the further point that the statutory demand was served at the end of November 2022, some two and a quarter or more years ago. It does not seem to me that it would be possible to rely upon such an outdated statutory demand as evidence of insolvency were a winding up petition to be presented. I do not need to determine that issue because I am entirely satisfied that the debt spoken to in the statutory demand is disputed in good faith and on substantial grounds.[31]In those circumstances, I am entirely satisfied that this application should be dismissed. I would also record that the application is totally without merit. For the avoidance of doubt, I would provide in my resulting order that Judge Pearce’s order is to remain in full force and effect, although, in light of the later evidence, it seems to me that it should be varied slightly so as to make it clear that the order extends to restraining Miss Johns from presenting any winding up petition founded upon the statutory demand, whether by herself, or through her servants or agents, including corporate entities or assigns, so as to make it clear that if Mr Steven Mantle is the successor to her business, then he is also enjoined from presenting any winding up petition.[32]I make that variation because it is clear that there has been a material change of circumstances since Judge Pearce first made his order in that Miss Johns appears to have sold the business to her brother and therefore it is appropriate to make that minor variation pursuant to CPR 3.1(7). This Transcript has been approved by the Judge. The Transcription Agency hereby certifies that the above is an accurate and complete recording of the proceedings or part thereof. The Transcription Agency, 24-28 High Street, Hythe, Kent, CT21 5AT Tel: 01303 230038 Email: court@thetranscriptionagency.com

order

(1) The Respondent, Sarah Johns, shall by 4pm on 4 April 2025, file at court and serve on the Applicant, Abbey Court Ltd, any witness evidence upon which she relies in support of her application; such evidence to include a witness statement signed by the Respondent with a statement of truth dealing, among other matters, with the following: (a) which legal person trades as Costella Group; (b) which legal person trades as Costella Inspections Group; and (c) whether the Respondent continues to maintain that the Applicant should be named as Abbey Court Solicitors Limited and, if so, why.(2) The Applicant shall by 4pm on 11 April file at court and serve on the Respondent any evidence on which it relies in response to the Applicant’s application. (3)) The Respondent shall by 4pm on 14 April 2025 file an electronic bundle containing all documents relevant to its application; such bundle to comply with Appendix X of the Chancery Guide. (4) The parties shall each, by 4pm on 15 April, file and serve a skeleton argument in electronic format, complying with Appendix Y to the Chancery Guide and appending any authorities upon which they rely; which skeleton argument shall address all issues relating to the Respondent’s application to set aside the order of 13 January 2023. (5) The Respondent’s application shall be listed for hearing at 10.30am today, 16 April 2025, with an estimated length of hearing of two hours; the hearing to be an attended hearing at the Manchester Civil Justice Centre. Paragraph (6) provided: For the avoidance of doubt that the evidence to be heard by the court at the hearing shall be limited to the contents of the witness statements herein, unless the court otherwise orders.”