Argentum Lex Wealth Management Ltd v Giannotti

On an application to restrain presentation of a winding-up petition, or to set aside a statutory demand, the Companies Court must identify a genuine and substantial dispute. The applicant must explain the dispute; a merely fanciful or insubstantial dispute is insufficient. The threshold is akin to a realistic prospect of success, but the jurisdiction is not a substitute for a trial or summary judgment application. Where substantial issues of construction or liability are properly arguable, they should ordinarily be determined in the appropriate substantive proceedings. The court may consider equitable conduct, including clean hands, but should not resolve serious allegations of dishonesty without proper evidential testing.

Argentum, successor to Wynyard Asset Management Ltd, had accepted responsibility for Wynyard’s regulated business and liabilities under a deed poll required by the Financial Services Authority. Mr Giannotti had obtained a consent judgment against Wynyard after bringing proceedings concerning negligent pension advice. Argentum did not satisfy the judgment, and Mr Giannotti served a statutory demand.

Argentum sought an injunction restraining presentation of a winding-up petition. HHJ Barker QC refused the injunction on 28 February 2011, holding Argentum liable under paragraph 10 of the deed poll. On appeal, Argentum argued that Mr Giannotti was no longer an eligible complainant, that the deed poll did not remove the need for a judgment against Argentum, and that it could not cover a judgment to which Argentum was not a party.

1. Appeal allowed. The Companies Court’s winding-up jurisdiction was not the appropriate forum for finally determining the substantial issues raised.
2. On an application to restrain presentation of a winding-up petition or set aside a statutory demand, the applicant must identify and explain the dispute. The dispute must be real and substantial, rather than fanciful or insubstantial. The court described the threshold as akin to whether there was a realistic prospect of success, while recognising that the distinction from the Part 24 summary-judgment test could be elusive.
3. Argentum’s arguments were properly arguable. They concerned the construction of “eligible complainant” in the deed poll, including whether it incorporated the technical meaning in the Financial Services Authority handbook and rules; the effect of withdrawal or dismissal of a complaint to the Financial Ombudsman Service; whether acceptance of predecessor liabilities removed the need for a judgment against the successor; and whether liabilities included a judgment against a predecessor to which the successor was not party.
4. Those issues required proper argument before a Chancery judge. They should not be disposed of by the summary procedure involved in setting aside a statutory demand or restraining presentation of a winding-up petition.
5. The court also considered the clean-hands objection arising from an inaccurate witness statement about disclosure of the claim to the Financial Services Authority. Although the doctrine was important and the explanation of inadvertence attracted reservations, it would not be right to dismiss the appeal on that ground without cross-examination where an allegation of deliberate deception would be serious.

• Court of Appeal (Civil Division): [2011] EWCA Civ 1341 — allowed the appeal.
• Chancery Division, Birmingham District Registry: HHJ Barker QC refused an injunction on 28 February 2011 and held Argentum liable under paragraph 10 of the deed poll.