Demand & Supply Cash & Carry Ltd (in liquidation) v. Ramesh Hirani

30 May 2012

Rupert Butler appeared for the liquidator in Demand & Supply Cash & Carry Ltd (in liquidation) v. Ramesh Hirani in which the Chancellor of the High Court handed down judgment on 25th May 2012, refusing the Defendant director’s application to set aside judgment entered in default of defence. The liquidator had brought a claim against Demand & Supply’s director under ss.212 and 213 of the Insolvency ACT 1986 for his direction of the company to commit VAT fraud in the wholesale of alcohol by using fictitious suppliers to set off bogus input tax claims against output tax.

The Defendant conceded that he could not show a real prospect of successfully defending the claim to justify setting aside the default judgment under CPR r.13.3(1)(a). However, he argued that the judgment should be set aside under r.13.3(1)(b) because accounting evidence that HMRC used to obtain the company’s provisional liquidation was flawed, and the allegations of deceit were so serious that he should be able to deny them under oath from the witness box.

The Chancellor agreed with the liquidator’s response, and held that submissions by counsel regarding the interpretation of spreadsheets were no substitute for expert evidence, and even if they were, they did not begin to throw doubt on other elements of the liquidator’s case, which did not rely on HMRC’s position. The suggestion that there had to be a trial in the event of serious allegations was contrary to r.13.3(1), which recognised the court retained a discretion. But there had to be a useful purpose in setting aside a regular default judgment and there was no likelihood of this Defendant ever being able to run a successful defence even if he had more time to examine documents and explain himself on oath.

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