Town & Country Properties (GB) Ltd & Ors v Black Capital & Ors

A dispute concerning a statutory demand must satisfy the summary judgment test. It must have a real prospect of success and be more than merely arguable. The court must avoid a mini-trial and may reject evidence as inherently implausible only in a clear case. An Insolvent Partnerships Order 1994 article 7 petition is subject to a broader insolvency regime and does not require a statutory demand. Where such a petition is amended to proceed under article 8, the article 8 statutory-demand requirements apply. A liquidated debt may arise under an investment agreement where the sum is objectively identifiable and due, including a contractual obligation to return 90% of an investment after expiry of the agreed term.

The Petitioners sought to wind up Black Capital, an unregistered partnership, and to make bankruptcy orders against two alleged partners. The partnership petition was initially presented under article 7 of the Insolvent Partnerships Order 1994 and was later amended to rely on article 8. The individual bankruptcy petitions were issued without compliant prior statutory demands.

The Respondents disputed Mr Ubhi’s status as a partner and challenged the alleged debts as unliquidated. The central issues were whether the partnership and individual petitions could proceed despite the procedural defects, whether there was a dispute on substantial grounds about partnership status, and whether any debt was liquidated.

1. Petition dismissed. The court was satisfied that there was a dispute on substantial grounds as to whether Mr Ubhi was a partner in Black Capital.
2. The applicable test was the summary judgment test. There was no practical difference between a genuine triable issue and a real prospect of success. A case had to be more than merely arguable and had to have evidential support. The court could reject evidence as inherently implausible only in a clear case. It had to avoid conducting a mini-trial or making findings on disputed evidence.
3. Although aspects of Mr Ubhi’s evidence were unsatisfactory and lacked credibility, the independent contractor and employment agreements created a sufficient evidential basis to prevent the case from being treated as clear enough for summary determination.
4. The court nevertheless found that the expired Managed Fund Agreements created a liquidated debt for 90% of the original investment. That sum was identifiable and due under the agreements after the 12-month term. Uncertainty about promised investment returns did not prevent reliance on this smaller contractual debt.
5. Article 7 of the Insolvent Partnerships Order 1994 permits reliance on sections 223 and 224 of the Insolvency Act 1986, including inability to pay debts as they fall due, without a statutory demand. Article 8 excludes those provisions and requires the modified statutory-demand regime in sections 221 and 222. Once the petition was amended to proceed under article 8, the statutory-demand requirements could not be ignored or retrospectively dispensed with.
6. The bankruptcy petitions also failed because the statutory demands did not allow the required three-week period. The court accepted that it had power under section 124(3), as modified, to permit petitions to be presented on different days, but there was no reason to make that order where the petitions failed on other grounds. Consequential matters were adjourned.