Craymanor Ltd v LS Power And Data Ltd

A winding-up petition should be restrained where the alleged debt is disputed in good faith on substantial grounds. The dispute need not satisfy a high threshold, but it must have real substance and a rational prospect of success. The Companies Court should not use winding-up proceedings to determine substantial factual disputes requiring disclosure and cross-examination. A petition founded on such a disputed claim is an abuse of process.

The Applicant sought an injunction restraining the Respondent from presenting a winding-up petition following a statutory demand. The Respondent claimed £8,284.50 for electrical supplies and installation. The Applicant said that it had paid the sum to bank details sent by email, while the Respondent alleged that the email formed part of a push payment fraud and that the Applicant had been warned not to use those details.

The central issues were whether the Applicant had paid the debt, whether the parties’ agreement made payment conditional on confirmation of the sum and account details, and whether those issues amounted to a bona fide dispute on substantial grounds.

1. Application granted. The Respondent was restrained from presenting a winding-up petition in respect of the alleged debt.
2. The governing principles, summarised in Coilcolor Ltd v Camtrex Ltd [2015] EWHC 3202 (Ch) and Angel Group Ltd v British Gas Trading Ltd [2012] EWHC 2702 (Ch), are that a petition should not proceed where the company disputes the petition debt, or sufficient of it, on substantial grounds. The court must be satisfied that the dispute is genuine, substantial and raised in good faith. A merely asserted dispute or contrived cloud of objections is insufficient.
3. The threshold is not high. A defence may be regarded as shadowy yet still meet the threshold: Tallington Lakes Ltd v South Kesteven District Council [2012] EWCA Civ 443.
4. There was a substantial dispute as to the Applicant’s obligation to pay and whether it had been breached. The dispute went to the Respondent’s status as a creditor and therefore its standing to present a petition. The Applicant’s case had a real prospect of success and was advanced in good faith.
5. The dispute concerned conflicting evidence about the email, the bank account details and communications warning the Applicant not to use them. It required Part 7 proceedings, disclosure and cross-examination. The Companies Court procedure was unsuitable for resolving those issues.
6. The alternative arguments concerning an implied contractual term, section 13 of the Data Protection Act, apparent authority and estoppel therefore did not require determination. Any further claim was to be commenced in the county court. Costs were reserved for further submissions unless agreed.

First-instance decision on an application to restrain presentation of a winding-up petition. No earlier decision in the same proceedings is stated.