Easy Letting & Leasing, Re

A winding-up petition must not be used to exert pressure where the alleged debt is bona fide disputed on substantial grounds. The court may investigate the dispute sufficiently to determine whether that threshold is met. Under Insolvency Act 1986, section 123(1)(e), non-payment may establish inability to pay debts where the debt was due, could not properly be disputed, and the company had an opportunity to pay but failed to do so. A debt not yet due when the petition was presented cannot support that conclusion.

Easy Letting & Leasing Limited applied to restrain Mrs Topdjian from advertising and pursuing a winding-up petition, alleging that the petition was an abuse of process. The petition claimed unpaid rent, a retained sum and statutory interest.

The court considered whether the alleged debt was genuinely disputed, whether the contractual payment terms had been varied by conduct, the effect of a partial tender, and whether the company had an opportunity to pay debts which were due.

1. Application dismissed. The court refused to restrain advertisement or further prosecution of the petition.
2. A winding-up petition is not automatically dismissed merely because the company alleges that the debt is disputed. The court will not permit a petition to be used to exert commercial pressure where the dispute is bona fide and founded on substantial grounds. It may investigate the dispute to the extent necessary to determine whether that condition is met.
3. Section 123(1)(e) of the Insolvency Act 1986 provides an alternative to the statutory-demand route. Non-payment may evidence inability to pay debts as they fall due where the debt is due, cannot properly be disputed, and the company has had an opportunity to pay but failed to do so.
4. Late payment did not establish a contractual variation. There was no proper evidential basis for estoppel or acquiescence, and no arguable contractual entitlement to retain £480.
5. On the morning of presentation, £2,525 was due, subject to a valid tender of £845 on account. The further £1,200 claim was not yet due and could not itself evidence inability to pay. The company knew what was claimed and had an opportunity to pay.
6. The petition was not an abuse of process. Although the principal sums were later paid, the petitioning creditor could continue to pursue the petition while petition and application costs remained unpaid or unprovided for.