Argentum Lex Wealth Management Ltd v Giannotti

The Court of Appeal allowed the appeal and held that the questions about the scope and construction of the FSA deed poll and the meaning of "eligible complainant" under the Financial Services and Markets Act 2000 (Part 16 and section 226) raised real and arguable issues which could not properly be resolved on a Companies Court application to restrain presentation of a winding-up petition or to set aside a statutory demand. The court applied the established test that a respondent must show a real, non‑fanciful dispute or "substantial grounds for disputing the claim" before such a summary remedy will be refused, drawing on the authorities including Re A Company and Abbey National v JSF Finance. The court further held that although there were concerns about the appellant's prior statements (the "clean hands" point), that allegation did not justify disposing of the appeal without allowing fuller argument and, where appropriate, cross-examination.

The appellant (Argentum) was the successor to Wynyard Asset Management Limited and had executed a deed poll in favour of the Financial Services Authority and the Financial Ombudsman Service accepting responsibility for past business. The respondent (Mr Giannotti) had obtained a consent judgment against Wynyard for £243,511 following negligent pension advice and served a statutory demand on Argentum when Argentum did not pay. Argentum sought an injunction to restrain the presentation of a winding-up petition, contending that Mr Giannotti was not an "eligible complainant" within the deed poll or section 226 of the Financial Services and Markets Act 2000 and that the debt was disputed.

The court below (HHJ Barker QC) refused the injunction, holding Argentum liable under paragraph 10 of the deed poll. Argentum obtained permission to appeal to the Court of Appeal (permission given by Toulson LJ).

The principal issues before the Court of Appeal were:

• the proper test for dealing with applications to set aside statutory demands or to restrain winding-up petitions (whether the Companies Court should go into the merits or only as far as showing a real and substantial dispute);
• the construction of the deed poll and whether its reference to "eligible complainant" requires an existing, continuing complaint to the Financial Ombudsman Service; and
• whether liabilities accepted by a successor under the deed poll extend to judgments obtained against the predecessor where the successor had no opportunity to contest those proceedings.

The Court of Appeal held that the legal issues raised were not fanciful and were suitable for full argument in the Chancery Division rather than by summary disposition in the Companies Court. It noted authorities (Re A Company; Abbey National v JSF Finance) establishing that a party resisting a statutory demand must demonstrate a real, substantial dispute. It also considered but did not finally decide the "clean hands" point, concluding that the appellant’s explanation of inadvertence should not be accepted or rejected without cross-examination. The appeal was therefore allowed to permit those matters to be argued properly before a chancery judge.

Appeal allowed. The court held that the construction of the deed poll (including the meaning of "eligible complainant" under Part 16 and section 226 of the FSMA 2000) and the scope of successor liability raised real, arguable issues which could not be resolved on a Companies Court application to restrain presentation of a winding-up petition; the matters should be ventilated in full before a chancery judge. The asserted failure to come to court with clean hands was not a sufficient reason to refuse the appeal without further inquiry.

Appeal from the Chancery Division, Birmingham District Registry (decision of HHJ Barker QC refusing an injunction on 28 February 2011). Permission to appeal was given by Toulson LJ. This Court of Appeal judgment [2011] EWCA Civ 1341 allowed the appeal.