Paul Matthews v BSN (SW) Property Limited & Anor

An application to re-list an insolvency application dismissed in the applicant’s absence is governed by CPR rule 23.11. The court should consider the reason for non-attendance, the promptness of the application and the underlying merits. Delay and absence of a good reason may justify refusal even where the underlying arguments have some merit.

A bankruptcy petition may be heard immediately after dismissal of an application to set aside a statutory demand where the parties are prepared, sufficient time is available and no injustice results. A contractual promise to repay a loan may create a conditional payment obligation and therefore a liquidated debt. Errors in a statutory demand do not require it to be set aside where the debtor understood the claim and suffered no prejudice.

The appellant appealed against orders made by DJ Wales on 18 June 2024. The district judge dismissed the appellant’s application to set aside statutory demands and made a bankruptcy order concerning a debt owed to BSN (SW) Property Ltd. The petition had been presented jointly by BSN and Oak First Investments Ltd, but the district judge did not need to determine Oak First’s separate liability.

The dispute arose from a share purchase agreement under which the appellant agreed that the company would repay loans made by the respondents and guaranteed repayment to BSN. The statutory demands contained incorrect particulars referring to a guarantee concerning another company, although they also exhibited the relevant agreement. The appeal concerned the setting-aside application, the timing and fairness of the bankruptcy hearing, the construction of the repayment clause, liquidated debt, contractual set-off and costs.

1. Application in absence. The relevant provision was CPR rule 23.11, applied by rule 12.1 of the Insolvency (England and Wales) Rules 2016. The application was not a trial, so rule 39.3 was not the applicable rule. The court should consider the reason for non-attendance, delay and the underlying merits. The district judge was entitled to find that the appellant had no good reason for absence, had not acted promptly and had no reasonable case on the merits. The delay was independently sufficient. The decision was an evaluative judgment that could not be overturned merely because the appeal court might have reached a different conclusion.
2. Hearing of the petition. It was not a serious procedural irregularity to hear the petition immediately after dismissing the setting-aside application, although the petition had not been administratively listed. The petition had been served and previously adjourned. Both parties were represented, had prepared skeleton arguments addressing the petition and had sufficient time. The appellant’s counsel did not object and the appellant suffered no injustice. The issue was one of substance rather than form.
3. Defective statutory demands. The errors in the demands did not cause prejudice. The amounts were correct, the relevant agreement was exhibited, and the appellant knew the basis of the alleged liability. The demands therefore remained effective. The appellant was also not entitled to reargue the same defects in the petition hearing under the principle in Turner v Royal Bank of Scotland.
4. Guarantee and liquidated debt. Properly construed objectively and as part of the agreement as a whole, clause 4.4 created a guarantee liability. Clauses 8.1 and 10 confirmed that the appellant had a primary obligation connected with repayment of the loans. The clause created a conditional payment obligation, rather than merely a promise sounding in damages. It consequently created a debt for a liquidated sum capable of supporting a bankruptcy petition.
5. Set-off. Clause 10 did not extinguish the debts owed to the respondents. Any indemnity under clause 7 was given by the seller and Mr Cachia, not by the respondent creditors. Further, an unliquidated damages claim under an indemnity was not a sum due capable of set-off under clause 10.
6. New point and costs. The liquidated-debt argument was not raised below and was refused on appeal because it might have affected the evidence and conduct of the hearing. The costs challenge also failed. The petition was a single joint petition, the debt owed to BSN exceeded the threshold and the district judge was entitled to apply the general rule that costs follow the event, modified for the bankruptcy context.
7. All six grounds failed. The appeal was dismissed. The respondents’ costs of the appeal were to be paid from the bankrupt estate, subject to written submissions on any different order.

• District Judge Wales: On 18 June 2024 dismissed the application to set aside the statutory demands and made a bankruptcy order in favour of BSN (SW) Property Ltd.
• High Court, Chancery Appeals: Permission to appeal was granted by Michael Green J on 3 February 2025. The appeal was dismissed.