Faced with a petition issued by His Majesty’s Revenue and Customs (HMRC) to wind up the Company on public interest grounds under the UK Finance Act 2022 (FA 2022), arising from an allegation that the Company’s business activities comprised a tax avoidance scheme, the Company sought judicial review of HMRC’s decisions in the Administrative Court on public law grounds: (1) a failure to consult; (2) an error of law; (3) failure to meet a requirement under the FA 2022; and (4) unreasonableness. The Company requested a stay of the proceedings before the Insolvency and Companies Court (IC Court) pending determination of the judicial review.

Grounds 2 and 3 for the judicial review were legal issues that the IC Court had to resolve before it could be satisfied of its own jurisdiction to make the winding up order. As to the other public law defences, the IC Court concluded that it would make no sense if HMRC would be unable to proceed to the hearing of a petition until any judicial review challenge had been dealt with. There was no express or implied restriction in the statutory language to prevent the Company from raising public law defences either.

This case provides a welcome reassertion of the strong presumption that legislation does not prevent individuals affected by decisions of public bodies from having a fair opportunity to vindicate their rights in court proceedings. Nonetheless there may be circumstances where the individual has had clear and ample opportunity to challenge an underlying administrative act but has failed to do so, and will therefore be prevented in enforcement proceedings from raising public law defences to the underlying administrative act.

In the absence of a stay because of parallel judicial review proceedings, the advantages to a defendant company in being able to raise public law defences are more limited, particularly where a public interest winding-up petition can, in any event, be opposed on the much more fact sensitive “just and equitable” test.

Section 162(1)(c) of the BVI Insolvency Act 2003 provides that the BVI Court may appoint a liquidator of a company if it is of the opinion that it is in in the public interest to do so. While Harneys does not practise the law of England and Wales, given that English authorities about the essential nature and effect of a winding-up petition are in principle fully applicable to the equivalent process in the BVI, the BVI Court may well take the same approach as the English Court in The Commissioners for His Majesty’s Revenue and Customs v Purity Limited.