Ensygnia Ltd v Rickard

In an application to restrain presentation of a winding-up petition, the court asks whether the alleged debt is bona fide disputed on substantial grounds. A dispute about some invoices is insufficient if an undisputed debt exceeding the statutory minimum remains. The debtor must challenge the whole petition debt, or reduce the undisputed balance below the statutory threshold. A bare assertion that professionally rendered work was unauthorised will ordinarily lack substance where timesheets and other evidence show that the work was performed and, at least in part, expressly instructed. The court may examine the evidence in detail, but the winding-up jurisdiction is not to be used to determine a substantial dispute that should be litigated in ordinary proceedings.

Ensygnia instructed Ipulse IP Partners LLP to provide patent-registration services. After Ensygnia changed representatives, David Rickard served a statutory demand in his own name for unpaid invoices issued in Ipulse’s trading name. The debts were subsequently assigned to him. The parties proceeded on the common ground that the assignment gave Mr Rickard standing to present a petition.

The application therefore concerned whether the invoiced sums were bona fide disputed on substantial grounds. Ensygnia challenged charges for patent work, foreign-agent disbursements, mark-ups, work after termination and possible duplicate billing.

1. Application dismissed. Mr Rickard was entitled to present a winding-up petition because the evidence disclosed an undisputed debt exceeding £750.
2. The governing principles were those summarised by Norris J in Angel Group Ltd v British Gas Trading Ltd [2012] EWHC 2702 (Ch). A petition should not be used to exert pressure to pay a debt genuinely disputed on substantial grounds. The court may nevertheless examine the evidence in detail and must identify whether an undisputed debt sufficient to support a petition remains.
3. It was unnecessary for Ensygnia to disprove every invoice if a substantial undisputed balance remained. Conversely, where numerous invoices were relied on, Ensygnia had to challenge all, or enough, to reduce the undisputed balance below £750.
4. Invoices 5, 6, 7 and 28 were supported by timesheets and other evidence. Invoices 5, 6 and 7 included work expressly authorised by Ensygnia. Bare assertions that the work was unauthorised did not amount to substantial grounds for dispute. Those invoices were prima facie due and sufficient to establish an undisputed debt exceeding the threshold.
5. The judge gave additional, non-dispositive views. Where Ipulse instructed foreign patent agents and incurred their charges, the contractual evidence indicated that Ipulse was liable to the agents and could recover the disbursements from Ensygnia. The possibility of a mark-up was a substantial issue capable of giving rise to a genuine dispute. The scope of the £620 filing charge and liability for work after disinstruction were also arguable. There was a real doubt about charging for time spent dealing with the dispute, although contractual interest was chargeable. A possible duplicate invoice could not be resolved on the evidence.
6. The later payment of the Mexican and Canadian agents meant that those disbursements no longer supported a petition. The remaining disputes did not affect the conclusion arising from invoices 5, 6, 7 and 28.