Red River & Anor v Sheikh & Anor

A winding-up petition is a class remedy available only where the petitioning creditor has a debt that is neither genuinely disputed nor subject to a substantial cross-claim. A cross-claim is substantial if it is properly arguable on grounds that are not shadowy or fanciful, is advanced in good faith, and leaves no undisputed balance exceeding the statutory minimum.

Applications to relitigate orders made by a judge of co-ordinate jurisdiction are generally impermissible unless the order has been set aside or varied on appeal. Contempt proceedings based on alleged false evidence are ordinarily premature before trial, cross-examination and assessment of the evidence as a whole.

The claimants, Red River and Ismail Dogan, sought relief concerning a settlement agreement resolving extensive commercial and property disputes with Anal Sheikh and Rabia Sheikh. The defendants made twelve applications, including applications for delivery up of security documentation, permission to present further winding-up and bankruptcy petitions, confirmation of alleged default judgment, strike-out of the claim, contempt proceedings, and the setting aside of earlier orders.

The court considered the effect of earlier orders made in the litigation, the alleged debt and cross-claim between the parties, the status of an asserted default judgment, and the procedural requirements governing contempt, bankruptcy and civil restraint applications.

1. Applications 2, 3, 4 and 5. The application for delivery up of the executed second legal charge was dismissed because the issue had already been decided by Briggs J and was res judicata at first instance. The application for permission to present a further winding-up petition was also dismissed. The company continued to have a bona fide cross-claim on substantial grounds, and no material change of circumstances had occurred. A winding-up petition could not properly be used where the alleged debt was disputed or subject to such a cross-claim.
2. The application to confirm alleged default judgment on the counterclaim was dismissed. No sealed judgment had been entered. The claimant had used the wrong form and had been told that the matter required consideration by a Master or judge.
3. The application to strike out the claim was dismissed. The pleaded breaches of the settlement agreement disclosed a proper cause of action and were not obviously devoid of merit or abusive.
4. Other applications. Applications seeking a vesting order, non-disclosure of material, and related relief were dismissed as hopeless, vague or misconceived. The contempt application under CPR 32.14 was premature. Following Daltel Europe Ltd v Makki [2005] EWHC 749 (Ch), the proper time to determine the truth or falsity of witness statements was generally at trial, after cross-examination and consideration of the evidence as a whole.
5. The application to set aside earlier orders was dismissed. Unless and until permission to appeal was obtained and the orders were varied or set aside, they remained binding. A court ordinarily lacked jurisdiction to set aside orders made by a judge of co-ordinate jurisdiction.
6. The bankruptcy application was misconceived. No bankruptcy petition could be presented until the statutory-demand application had been determined, and the relevant statutory machinery then had to be followed. All twelve applications were dismissed. All except the contempt application were certified as totally without merit. No civil restraint order was made, but the court gave a final warning.

First-instance decision. The judgment refers to earlier orders and judgments made in the same litigation, but no appellate decision is identified.