CR-2023-001309 - [2025] EWHC 2314 (Ch)

On 9^th March 2023, Mr David Ingram, the then joint liquidator (“the Liquidator”) of Frencheye (Stratford) Limited (“the Company”) issued an application under section 212 of the Insolvency Act 1986 (“the Main Application”) alleging that the respondents, as directors of the Company, had:

The Main Application was accompanied by the witness statement of the Liquidator, dated 7^th March 2023, exhibiting draft points of claim. These were ordered to stand as points of claim by a consent order made by Chief ICC Judge Briggs on 4^th April 2023. He directed the filing of points of defence and points of reply.

The points of defence deny that the monies paid into the ECL account were the Company’s trading receipts, or the Company’s monies at all. It is said that Mr Azam was the inventor and owner of the trading names and trademarks “Frencheye” and “French Eye”. This was to be used as part of a “franchise model” of businesses carried on by third parties, who would be licensed to use the name and obtain stock from one of Ms Drozdziol’s businesses. The Company was incorporated by Mrs Masood with a view to trading at premises at Westfield Stratford (“the Premises”) using the “Frencheye” trading name under this franchise model. In fact, it did not trade and remained dormant. The business at the Premises, it is said, was initially carried on by a company called Riotsi Limited (“Riotsi”), owned by Mr Azam and Ms Drozdziol, under a lease of the Premises entered into on 16^th January 2012.

The points of defence allege that Mrs Masood had considered investing in Riotsi but instead paid £180,000 for a transfer of the lease of the Premises to the Company, which was subject to a licence to Riotsi, which continued to trade from the Premises. In order to obtain the consent of the landlord it was understood that the Company and Riotsi would need a common director. Mrs Masood therefore resigned as a director and Ms Drozdziol was appointed on 7^th December 2012 as a mere formality. The transfer of the lease and the grant of the licence to Riotsi were completed in November 2013. Mrs Masood was reappointed as a director of the Company on 13^th February 2014 and Ms Drozdziol resigned in October of that year.

The points of defence go on to say that Riotsi did not trade profitably and so, on 1^st April 2014, its stock and equipment were purchased by a company called Agni Enterprise Limited (“Agni”), which was a corporate vehicle used by Ms Drozdziol, and Agni began trading from the Premises under a further licence from the Company. It continued until 31^st March 2015, when its stock and equipment were purchased by Blue Lapel Clothing Limited (“Blue Lapel”), which traded at the Premises until 31^st March 2016, again under licence from the Company.

By an application dated 21^st June 2023, the Liquidator sought to strike out paragraphs 13-25, 35, 37(2), 38(1), 38(2)(a), 38(4)(a), 39(1)(a) and 40(1) of the points of defence, that is to say those parts of the defence that contend that the Company did not trade from the Premises, on the ground that such a contention amounts to a collateral attack on a judgment of the magistrates’ court on 3^rd March 2017 and is thus an abuse of process (“the Liquidator’s Application”). The respondents, for their part, resist that application and, on 15^th August 2023, made a cross-application to strike out those parts of the points of claim that are based on the Company having traded from the Premises (“the Respondents’ Application”). Alternatively, they sought reverse summary judgment. The basis for the Respondents’ Application is that the Liquidator’s claim that the Company traded is unparticularised and an abuse of process and, further, that the Liquidator had not adduced sufficient evidence to show that he had real prospect of succeeding at trial on this point.

The two applications were listed to be heard on 8^th and 9^th October 2024, but that hearing was vacated by order dated 2^nd September 2024 and relisted for 25^th and 26^th June 2025.

The only other procedural matter that I need mention is that, following the making of the applications, Mr Ingram was replaced as liquidator by Mr Nicholas Nicholson in December 2023. References to “the Liquidator” in relation to events since then should be taken as a reference to Mr Nicholson.