In the Matter of Lime'In Limited

In winding-up proceedings, a company resisting a petition must show reasonable grounds for disputing the debt or prima facie evidence supporting a counterclaim. A written lease stating the rent, payments made on that basis, the absence of documentary support for a different rent, and contemporaneous correspondence may establish that the alleged dispute has no real foundation. A bare assertion that premises were not ready is insufficient. On a renewed application for permission to appeal, permission should be refused where the proposed appeal has no real prospect of success. An adequately evidenced explanation for delay may justify an extension of time.

Landlords served a statutory demand on the company for rent and service charges. The company resisted the ensuing winding-up petition, alleging that the rent was lower than the amount stated in the lease and advancing counterclaims concerning the rent-free period and the condition of the premises. Miss Sonia Proudman QC, sitting as a deputy High Court judge in the Chancery Division (in Bankruptcy), found no reasonable basis for disputing the debt and no prima facie evidence supporting the counterclaims. She made a winding-up order and refused permission to appeal.

On renewal, the company sought an extension of time and permission to appeal. The central issue was whether its evidence disclosed a real prospect of successfully challenging the judge’s conclusions.

Disposition

1. The extension of time was granted because the solicitor’s statement, supported by contemporaneous documents, provided a valid explanation for the delay.
2. Permission to appeal was refused because the proposed appeal had no real prospect of success.

Reasons

1. The lease recorded an annual rent of £19,420 plus VAT. The company had paid three instalments on that basis, and produced no document supporting its assertion that the true rent was £15,000. The fact that the rent deposit represented one quarter of £15,000 did not provide a sufficient evidential foundation. The absence of any allegation in two earlier petitions that the rent was overstated further weakened the company’s case. The Court of Appeal agreed with the deputy judge that there was no real dispute as to the amount of rent.
2. The company argued that the rent-free period began later because fitting-out works were not completed on time. The evidence showed that possession was permitted from 1 July and that the parties had agreed a long-stop commencement date of 1 November, although that term was omitted from the agreement for lease. A contemporaneous letter from the company’s solicitors acknowledged the omission, confirmed the understanding, and stated that the clients had accepted the advice given. The letter explained the position and did not support a viable appeal.
3. The proposed counterclaim based on the premises not being ready was unsupported by documents. It amounted to a bare assertion. The deputy judge was entitled to find that there was no prima facie evidence proving the alleged facts and no reasonable ground for the cross-claim.

1. Court of Appeal (Civil Division): On the renewed application, Lord Justice Aldous granted an extension of time but refused permission to appeal.
2. High Court of Justice, Chancery Division (in Bankruptcy): Miss Sonia Proudman QC, sitting as a deputy High Court judge, made a winding-up order on 5 November 2001 and refused permission to appeal.