Michel Marie Raoul Gerard Péretié v Eden Farm SRL

On an application to set aside a statutory demand, the debtor need only show a genuine triable issue or a real prospect that the dispute will succeed. The threshold is low, and the court should not conduct a mini-trial. A case supported by evidence and not inherently incredible may satisfy the test even where it has evidential difficulties.

A jurisdiction challenge based solely on the bankruptcy jurisdiction gateways is not ordinarily determined under rule 10.5(5)(d) of the Insolvency (England and Wales) Rules 2016. The appropriate protective remedy is ordinarily an anti-suit injunction, sought urgently and on notice. Where the debt is substantially disputed, the statutory demand should be set aside without deciding construction issues which depend on disputed factual background.

Eden Farm SRL served two statutory demands on Michel Marie Raoul Gerard Péretié in respect of an alleged personal guarantee of loan notes issued to London Equity Property Projects Limited, a company of which he had been a director and shareholder.

The applicant disputed the alleged debt on substantial grounds. He denied signing or authorising the guarantee and also disputed its enforceability and construction. He additionally argued that his residence in Dubai meant that a bankruptcy petition could not properly be presented in England and Wales.

The central issues were whether the signature and authority dispute had a real prospect of success and how any jurisdiction challenge should be handled at the statutory-demand stage.

1. Statutory demands set aside. The applicant established that the alleged debt was disputed on grounds which appeared substantial within rule 10.5(5)(b) of the Insolvency (England and Wales) Rules 2016.
2. The relevant test was whether there was a genuine triable issue or a real prospect of success. The burden lay on the applicant, but the threshold was low. The court was not to conduct anything approaching a mini-trial. The applicant’s evidence that he had neither signed nor authorised the Letter was not inherently incredible and was not flatly contradicted by the contemporaneous documents. Resolving the conflicting evidence required cross-examination and a trial.
3. That conclusion disposed of the application. It was therefore unnecessary to decide whether the Letter was enforceable, whether it was too vague, or whether it created a “see to it” obligation rather than an obligation to pay a liquidated sum. Those questions depended on disputed factual background and were left for any subsequent Part 7 claim.
4. The jurisdiction issue did not arise. Applying the approach in Lyons v Bridging Finance Inc and Jones v Aston Risk Management Ltd, a jurisdiction challenge unrelated to the integrity of the debt or the form of the statutory demand was not ordinarily determined under rule 10.5(5)(d). The court was required to follow Jones unless convinced that it was wrong, and was not so convinced.
5. Obiter, if the debt had not been substantially disputed, the court would have dismissed the set-aside application but allowed an appropriate period before presentation of a bankruptcy petition under rule 10.5(8), so that the applicant could seek an anti-suit injunction. Future applicants raising only jurisdiction should generally issue that injunction application immediately and on notice. Where other set-aside grounds exist, the injunction application should be issued alongside the set-aside application.