Ricketts v Ad Valorem Factors Ltd

The Facts

1. The Air Component Company Limited (Air Component) was incorporated in 1971. On

10 February 1998 it went into creditors’ voluntary liquidation. At that date Mr

Christopher Ricketts, the appellant, was a director, having been appointed on 2 January

1998. Air Component has since been dissolved.

2. From 2 March 1998 Mr Ricketts was a director of another company, which has also

become insolvent. It was incorporated in 1997 under the name Getseen Limited and

changed its name to Air Equipment Limited on 15 December 1997. Following a

complaint from a third party, it changed its name on 3 February 1998 to Air Equipment

Company Limited (Air Equipment). 0n 21 October 1999 Air Equipment went into

creditors’ voluntary liquidation owing debts, the recovery of which is sought in this

action.

3. Air Equipment owed £6,596.96 to Hankison UK Limited for unpaid goods and services

supplied and delivered to it between May and November 1999. The debt was assigned by

Hankison to Ad Valorem Factors Limited, the respondent, which carries on a debt

factoring business. Notice of the assignment was given to the liquidator of Air

Equipment.

4. Ad Valorem claimed payment of the debt and interest directly from Mr Ricketts on the

ground that he was personally liable for the debts of Air Equipment by virtue of s 216

and 217 of the 1986 Act.

5. On 28 November 2002 District Judge Mackenzie, sitting in the Redditch County Court, gave

summary judgment under CPR Part 24 against Mr Ricketts for £8,235.03 and costs. The

appeal, for which the District Judge granted permission, has been brought directly to this
 court by use of the leapfrog procedure in CPR Part 52.14. As the District Judge said in

granting permission, the point raised is one of considerable importance to the general public,

as well as to the parties.

Judgment

Appeal dismissed with costs, such costs to be on the standard basis and subject to a detailed

assessment if not agreed; interest is to be awarded on the judgment sum at the normal rate, not at

the increased rate; no stay of execution of the judgment; permission to appeal to the House of

Lords refused.

First Independent Factors & Finance Ltd v Mountford

Explanation

Classic Conservatories & Windows Ltd went into creditors' voluntary liquidation on 19

January 2005. The estimated deficiency as regards unsecured creditors exceeds £251,000. Its

unsecured creditors included two suppliers, Nicholas Gray Building Plastics and Genesis PVCU

Ltd. First Independent Factors and Finance Ltd has bought their debts at a deep discount, and

now seeks to recover those debts from Mr Ian Mountford, who was a director of Classic

Conservatories & Windows Ltd when it went into liquidation. The basis on which Mr Mountford

is said to be liable is that he has incurred personal liability for the debts of Classic Conservatories

& Windows Ltd under section 217 of the Insolvency Act 1986, because he has been in breach of

section 216 of that Act.

Judgment

Taking all factors together and in the context in which the two names were used, the judge

held that Classic Conservatories & Windows Ltd did suggest an association with Classic Roofs
Limited. Accordingly, Mr Mountford was personally liable for the debts of Classic

Conservatories & Windows Ltd

 References

First Independent Factors & Finance Limited v Mountford [2008] EWHC 835 (Ch)

Ricketts v Ad Valorem Factors Ltd [2003] EWCA Civ 1706 (28 November 2003)