Breyer Group Plc v RBK Engineering Ltd

A winding-up petition is inappropriate where the alleged debt is disputed on bona fide and substantial grounds, or where the company has a substantial cross-claim. The Companies Court should not determine complex contractual, technical or quantum disputes which are suitable for ordinary proceedings or adjudication. It must examine the evidence sufficiently to ensure that the dispute is genuine and has a rational prospect of success, while guarding against both sham defences and commercial oppression. Contractual payment-notice machinery does not necessarily make the whole sum immediately due when a notice is late. A retention claim may not be separable where its quantification depends on the final account and unresolved defects.

RBK Engineering Ltd presented a creditor’s winding-up petition against Breyer Group Plc for £258,729.16, said to be due under a construction sub-contract and settlement arrangements. Breyer applied to restrain further steps and to strike out the petition. It maintained that it was solvent, that the alleged debt was disputed, and that it had substantial contractual and technical cross-claims concerning payment machinery, defective work, electrical certification and boiler testing. The central issues were whether RBK was a creditor with standing to present the petition and whether continuation of the insolvency proceedings would constitute an abuse of process.

1. The petition was struck out as an abuse of process. Breyer was solvent and had the financial means to pay. The evidence showed a dispute about liability rather than inability to pay.
2. Applying the principles summarised in Angel Group v British Gas [2012] EWHC 2702, the court examined the evidence in detail. Breyer had a range of bona fide and substantial defences, together with potential cross-claims. These included disputes about the contractual terms, payment dates, defective work, electrical certificates and boiler testing. The issues were not suitable for resolution in winding-up proceedings.
3. The alleged lateness of Breyer’s Payment Notice did not automatically create a debt for the whole amount claimed. On the contractual provisions viewed as a whole, it was at least arguable that Breyer had a reasonable period to assess the application and issue the relevant notice. A late notice would not necessarily extinguish Breyer’s right to rely on contractual conditions or a substantial counterclaim.
4. The retention claim was not presently separable or properly quantified. Its amount depended on the final gross sum and on unresolved issues concerning completion and defects.
5. Insolvency proceedings can exert disproportionate commercial pressure because advertising a petition may damage banking and contractual relationships. The court must guard against sham objections, but must also prevent insolvency procedures being used to pressure payment of a genuinely disputed claim. The dispute belonged in adjudication under the contractual scheme or in ordinary proceedings.
6. The judgment was delivered publicly. The open justice principle required very good reasons for departing from publicity, and no sufficiently strong reasons were shown.