A Company, Re

Advertisement of a winding-up petition should be restrained, and the petition struck out, where the unpaid debt is subject to a bona fide dispute on substantial grounds or a genuine and serious cross-claim with some merit or substance. The court need not determine whether the cross-claim is likely to succeed. It must decide only whether it has a real, rather than fanciful, prospect of success. An alleged oral agreement to pay a reasonable finder’s fee may satisfy that threshold, even where the evidence is disputed and the amount remains to be quantified. A point concerning the maturity of the cross-claim will not prevent relief where the claim will become due by the anticipated advertisement of the petition.

Foundation Piling Limited applied to restrain advertisement of a winding-up petition presented by Mr Anthony Coyle for unpaid debts totalling £4,588.38. The company had tendered £2,238.38 and asserted a cross-claim for £2,000 plus VAT, said to arise from an oral agreement to pay a finder’s fee. The evidence concerning the agreement, its amount and the parties involved was disputed. The central issues were whether the cross-claim had sufficient merit to prevent advertisement and whether it was presently due.

The application was granted. Advertisement of the winding-up petition was restrained and the petition was struck out.

1. The court’s task was to determine whether the unpaid part of the alleged debt was subject to a bona fide dispute on substantial grounds, a genuine and serious dispute, or a cross-claim with some merit or substance. These formulations imposed a threshold similar to, or possibly slightly higher than, the threshold for permission to defend under Part 24.
2. The court was not required to decide whether the cross-claim was more likely than not to succeed. It had to determine only whether the claim had a real rather than fanciful prospect of success in ordinary litigation.
3. The evidence disclosed an alleged oral agreement that Mr Coyle would pay a finder’s fee. Although the evidence was inconsistent in some respects, and Mr Coyle denied that the relevant discussion had occurred, there was evidence from two witnesses that he had acknowledged an obligation to pay a fee. The proper amount could be determined at trial under the doctrine of quantum meruit.
4. The alleged fee was invoiced subject to 28 days’ credit and would become due on 15 July. That issue did not defeat the application because the petitioner did not propose to advertise the petition before then. By the time of advertisement, or shortly afterwards, the cross-claim would be due if otherwise valid.