Aries GNH (Operations) Ltd v Robson Asset Management Manco Ltd (Rev 1)

A winding-up petition may be resisted by a cross-claim even where the petition debt is admitted or substantially undisputed. The respondent must establish, on the balance of probabilities, a serious and genuine cross-claim equal to or exceeding the petition debt.

Contractual documents forming part of a sophisticated financing package should be construed through a unitary exercise. The court starts with the language, considers the relevant context, reads the documents as a whole and checks competing constructions against their commercial consequences. Documents executed together and having a symbiotic relationship may need to be read together. An apparently unrestricted power may therefore be subject to limits found in the related agreement.

The petitioner sought the winding up of a management company for an admitted debt. The respondent relied on unpaid incentive fees under a hotel management agreement as a cross-claim.

The petitioner argued that a later duty of care deed had released all liabilities under the management agreement following a mezzanine acquisition event. The respondent argued that the release notice was invalid because it was served outside the time period imposed by the related intercreditor agreement. The court therefore had to determine both the applicable winding-up petition threshold and the proper construction of the financing documents.

1. Cross-claim threshold. A creditor need not be a judgment creditor to present a winding-up petition. The petition debt was not substantially disputed. The respondent nevertheless bore the legal and evidential burdens of establishing a cross-claim equal to or exceeding the petition debt, the evidential burden being discharged on the balance of probabilities. A serious and genuine cross-claim could be raised even where the petition debt itself was not disputed, applying the approach in Wilson and Sharp Investments Ltd v Harbour View Developments [2015] EWCA Civ 1030 and Re Bayoil SA [1999] 1 WLR 147.
2. Construction. The court applied a unitary and iterative approach. It began with the language, considered the relevant factual matrix known or reasonably available when the agreements were made, read the documents as a whole and tested competing interpretations against their commercial consequences. Subjective intentions were disregarded. The professionally drafted and sophisticated nature of the documents meant that textual analysis carried substantial weight, consistently with Arnold v Britton [2015] UKSC 36, Wood v Capita Insurance Services Limited [2017] UKSC 24 and Re Lamesa Investments Limited [2020] EWCA Civ 821.
3. Release. The duty of care deed and intercreditor agreement had been executed as part of the same financing package and had a symbiotic relationship. They therefore had to be read together. Although the deed authorised release of subordinated management liabilities at “any time” after a mezzanine acquisition event, the intercreditor agreement restricted the relevant instruction to the specified acquisition period and required the termination and release to take effect only upon satisfaction of stated conditions.
4. The release notice was served outside that period and was ineffective to release the liabilities under the management agreement. The respondent consequently had a serious and genuine cross-claim, supported by sufficient evidence that unpaid incentive fees equalled or exceeded the petition debt. The petition was dismissed.

First-instance decision. The judgment does not state any subsequent appellate history.