Francis v Solomon Taylor & Shaw (a firm)

A litigant in person must be given a fair opportunity to understand and answer the opposing party’s case. Where an earlier hearing was unfair, an appellate court may consider the underlying application afresh. A guarantee which expressly records detailed invoices and provides for payment of them by a specified date may convert those otherwise unliquidated fees into a liquidated debt. A statutory demand should be set aside only where the debtor demonstrates a genuine and substantial triable issue. Arguments unsupported by the guarantee or contradicted by the debtor’s own evidence do not satisfy that threshold.

The appellant sought permission to appeal from the dismissal by District Judge Jones of his application to set aside a statutory demand issued by the respondent solicitors. The demand concerned sums said to be due under a deed of guarantee, including invoices listed in a schedule and further legal fees.

The appellant alleged that the respondent had failed to comply with commitments concerning continued legal services and flexibility over payment, and that the fees were not a liquidated debt. He also contended that the District Judge had applied the wrong test. The High Court first considered whether the original hearing had been fair and then addressed the merits of the application.

1. Permission and fairness. The appellant had received the respondent’s skeleton argument only shortly before the original hearing and had not been given a proper opportunity to read or answer it. Where counsel appears against a litigant in person, the court must ensure that the litigant has a fair opportunity to put forward his case. The original hearing was therefore unfair.
2. Permission to appeal was granted. Because the hearing below had been unfair, the court considered the merits afresh rather than restricting itself to alleged errors of law or principle.
3. Alleged collateral agreement. The appellant’s case was that payment by 28 February 2011 was flexible and conditional upon continued legal services and reductions in the underlying indebtedness. The evidence showed no reduction by that date. Even on the appellant’s own case, the alleged agreement had not been complied with. The argument therefore disclosed no genuine triable issue.
4. Liquidated debt. The court applied the reasoning in Truex v Toll [2009] 4 All ER 419. Although future fees described generally in the guarantee might be unliquidated, the detailed invoices set out in its schedule were expressly agreed sums payable by 28 February 2011. The guarantee therefore made those unpaid sums liquidated debts.
5. The District Judge’s reference to the balance of probabilities created uncertainty about the test applied. Nevertheless, none of the appellant’s arguments demonstrated a genuine triable issue. The appeal was dismissed and the stay on the bankruptcy petition was lifted. No further stay was granted. Any second appeal required permission from the Court of Appeal under CPR 52.13.

• Slough County Court: District Judge Jones dismissed the application to set aside the statutory demand.
• High Court (Chancery Division): Permission to appeal was granted because the original hearing was unfair, but the appeal was dismissed on the merits and the stay on the bankruptcy petition was lifted.