Insolvency Service
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High Court orders builders and tradesmen referral service into liquidation
Four linked Brighton companies that claimed to provide a consumer protection service to the public by offering a free database of trusted builders and tradesmen to use have been ordered into liquidation in the High Court on grounds of public interest following an investigation by Company Investigations (“CI”) of the Insolvency Service.
The Building Trades Database Limited, Quality Build Services Limited, Coast 2 Coast Building Services Limited and MTB Sussex Limited variously traded between October 2008 and February 2011 and each of the companies operated a website which purported to enable members of the public to secure the services of tradesmen:
The arrangement was members of the public could submit an enquiry to the company’s website detailing their work requirements to receive a recommendation for an approved builder or tradesman.
Tradesmen were persuaded by using cold calling techniques to register as members on the websites operated by the companies in return for the payment of a fee typically of between £200-£300 plus VAT to entitle them to receive enquiries for work. In the event that work was referred to the tradesmen by the companies a commission was payable to the companies.
Each of the companies made false and misleading statements to tradesmen in order to recruit them. No or insufficient evidence was provided to the investigation that tradesmen received any referrals or any commercial benefit whatsoever as a result of their membership.
In all nearly £1 million was raised by the companies from around 4,000 tradesmen which appears to have all been applied in the payment of commission fees to the several sales staff employed to recruit them and payments to the companies directors.
Welcoming the Court’s winding up judgement, Company Investigations Supervisor Chris Mayhew said:
“This sends an unequivocal message to unscrupulous directors; their companies will be investigated and where necessary brought before the Court. Our investigation uncovered that The Building Trades Database Limited preyed on tradesmen to build up a database business built on seriously misleading and unfounded statements to persuade them to enrol for the purported service. The business effectively migrated from one company to another and the continuing deceit on tradesmen unfortunate enough to have been contacted by these companies is perhaps best illustrated by the discovery that the telephone numbers for the positive testimonials about one of the companies, Coast 2 Coast Building Services Limited, purportedly from two tradesmen, matched those for two mobile telephones found at the company’s former trading address”.
Ends
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Notes to Editors
1. The Building Trades Database Limited was incorporated as a private company on 30 April 2008. The registered office of the company is at 5 th Floor, Vantage Point, New England Road, Brighton, East Sussex, BN1 4GW. The recorded directors of the company have been Miss Carol Gillian Frances Cleveland (from 30 April 2008 to 19 March 2009), Mr Andrew Norman (from 12 February 2009 to 10 May 2010), Mr Daniel Robert Huttton (from 30 September 2009 to 6 November 2009), Mr Philip Anthony Burton (from 5 November 2009 to 23 April 2010 and Mr Jason Murray (from 12 January 2010 to 23 April 2010). Miss Cleveland is shown to have been the company secretary from 30 April 2008 to 19 March 2009. No successor company secretary was appointed.
2. Quality Build Services Limited was incorporated as a private company on 4 August 2009. The registered office of the company is at Unit 11, Link House, Link Place, Brighton, BN1 7GA. The recorded directors of the company have been Mr Samuel Aaron Smeaton (from 4 August 2009 to 18 February 2010) and Mr Edward James Plant (from 18 February 2010 to date). Mr Smeaton is shown to have been the company secretary from 4 August 2009 to 18 February 2010. No successor as company secretary was appointed. The company was dissolved on 22 March 2011.
3. Coast 2 Coast Building Services Limited was incorporated as a private company on 18 February 2010. The registered office of the company is at Unit 36, 88-90 Hatton Garden, London, EC1N 8PN. The recorded directors of the company have been Mr Samuel Smeaton (from 18 February 2010 to 17 May 2010) and Mr Daniel William Boswell (from 27 April 2010 to date). Mr Boswell is shown to have been the company secretary from 27 April 2010 to date.
4. MTB Sussex Limited was incorporated as a private company on 17 August 2010. The registered office of the company is at 74 Preston Road, Brighton, East Sussex, BN1 4QG. The sole recorded director of the company has been Mr Daniel Boswell (from 17 August 2010 to date). No company secretary is shown to have been appointed.
5. The petitions to wind up the companies (and to restore Quality Build Services Limited to the register and wind up) on grounds of public interest were presented on 19 August 2011 under the provisions of section 124A of the Insolvency Act 1986.
6. The petitions to wind up the companies were presented following confidential enquiries carried out by Company Investigations, part of the Insolvency Service, under section 447 of the Companies Act 1985, as amended. The investigation was hampered by a lack of co-operation and absence of proper accounting records,
7. The companies were found to be linked by reason of their involvement in related activities, their operation of the same business model, trading in consecutive periods and their connections to connected persons including Mr Andrew Norman, Mr Samuel Smeaton and Mr Daniel Boswell who each failed to co-operate with the investigation. Mr Smeaton, who it seems, was involved with all of the companies, initially pretended in email correspondence with the investigator that the investigator had the wrong address and that he was instead “Julian Smeaton of Devon”.
8. The grounds for winding up the companies were variously their lack of commercial probity and making misleading and unfounded statements to persuade tradesmen to enrol for the service; failure to maintain, preserve and deliver up adequate accounting records; failure to co-operate with the investigation; failure to submit annual returns and accounts; insolvency and abandonment. The investigation found, and the Court agreed, that amongst other things, The Building Trades Database Limited had falsely claimed to have work available to refer to prospective members; Quality Build Services Limited had similarly falsely claimed to have work available and to be an established nationwide building company with a connection to major insurers and house builders and undertaking work for housing associations; Coast 2 Coast Building Services Limited had also falsely claimed to have work available and to be a well established and highly recognised nationwide building contractor covering 70 per cent of the UK and to be an approved contractor for major insurance companies and banks; and MTB Sussex Limited had similarly falsely claimed to have work available and to be a well established and highly recognised nationwide building contractor covering over 70 per cent of the UK providing the highest level of craftsmanship on every project.
9. In ordering the companies into liquidation on 11 October 2011 Ms Registrar Barber described the testimonials as an ‘inside job’ and said that:
“Each company made misleading and unfounded statements to tradesmen by a variety of methods including cold calling and on their websites in order to lure tradesmen into paying a membership fee. Despite a vigorous investigation into the trading practices of each company, no or insufficient evidence was uncovered, still less was provided by the companies, that anyone who signed up received any work referrals at all or received any commercial benefit. I am satisfied on the Secretary of State’s uncontested evidence before me that all of the grounds in each petition are made out and I am satisfied that it is appropriate for the Court to order Quality Build Services Limited to be restored to the Register and be wound up in the public interest. I am also satisfied that it is in the public interest that The Building Trades Database Limited, Coast 2 Coast Building Services Limited and MTB Sussex Limited should also be wound up on grounds of public interest and I do so order”.
10. Company Investigations, part of the Insolvency Service, carries out confidential enquiries on behalf of the Secretary of State for Business, Innovation & Skills (“BIS”).
11. The Insolvency Service administers the insolvency regime investigating all compulsory liquidations and individual insolvencies (bankruptcies) through the Official Receiver to establish why they became insolvent. The Service also authorises and regulates the insolvency profession; deals with disqualification of directors in corporate failures; assesses and pays statutory entitlement to redundancy payments when an employer cannot or will not pay employees; provides banking and investment services for bankruptcy and liquidation estate funds; and advises ministers and other government departments on insolvency law and practice. Further information about the work of The Insolvency Service is available from http://www.bis.gov.uk/insolvency
12. All public enquiries concerning the affairs of the company should be made to: The Official Receiver, Public Interest Unit , 21 Bloomsbury Street, London, WC1B 3QW Telephone: 020 7637 1110 Email: piu.or@insolvency.gsi.gov.uk
13. Media enquiries should be directed to:
Ade Daramy, Press Officer on 020 7596 6187
Contacts:
Ade Daramy
Phone: 020 7596 6187
ade.daramy@insolvency.gsi.gov.uk
