The British Film Institute v Hall Media Group Limited

A winding-up petition may proceed where the petition debt is not genuinely disputed on substantial grounds. A set-off or cross-claim must be supported by evidence showing a substantial and material reduction in the debt. Where contractual performance has been suspended by agreement, claims based on subsequent non-performance cannot ordinarily found a set-off or cross-claim. An agreed reduction in the contractual fee may settle claims arising from the omitted benefits. The court may make a winding-up order where an undisputed balance exceeding £750 remains due and the statutory demand deeming provision applies, even if the precise amount of a possible cross-claim is uncertain.

The British Film Institute presented a winding-up petition against Hall Media Group Limited in respect of an unpaid sponsorship fee arising under a sponsorship agreement. The petition debt was based on a statutory demand, and the Company alleged that the agreement had been terminated or paused and that it had contractual claims capable of being set off against the debt.

The court considered the effect of an agreed reduction in the fee, the parties’ subsequent suspension of contractual performance, alleged breaches before the suspension, the admissibility and substance of further evidence, and whether any possible set-off or cross-claim reduced the debt below the statutory threshold or otherwise affected the Petitioner’s standing.

1. Debt and contractual position. The sponsorship fee was payable on invoice and was not conditional upon the Petitioner’s continuing performance. The Petitioner’s February 2022 communication did not terminate the agreement. The Company accepted a pause in performance and accepted the reduced fee of £180,000 plus VAT. That reduction settled disputes arising from the non-delivery of the Future Film Festival benefits, BFI Memberships and video assets.
2. Effect of suspension. The parties agreed by about 6 March 2022 to suspend further contractual obligations unless and until the sponsorship fee was paid. The Company therefore could not maintain a set-off or counterclaim for non-performance occurring after that date. Potential claims for breaches before the suspension remained legally possible, except insofar as settled by the fee reduction.
3. Genuine and substantial dispute. The Company’s evidence did not particularise any substantial pre-suspension breach or establish consequential loss. The evidence concerning the British Blacklist did not relate to a dispute with the Petitioner. Even assuming breach and loss, the evidence could not support a set-off or cross-claim approaching £50,000 or £100,000.
4. Standing and winding-up order. In any event, the Petitioner had an undisputed debt exceeding £750 within Rule 14.1(3) of the Insolvency Rules 2016. The uncertainty of any possible claim did not prevent the court from making the order where the undisputed balance remained above the threshold. The statutory demand deeming provision applied, and the Company’s evidence established inability to pay its debts under section 122(1)(f) of the Insolvency Act 1986.
5. Outcome. The Petitioner had standing to present the petition and was entitled to the compulsory winding-up order sought.

First-instance decision. No appellate history is stated in the judgment.