Anthony McGann v Eldonian Community Trust Limited

A creditor has standing to present a winding-up petition only where the alleged petition debt is established, or is not subject to a bona fide dispute on substantial grounds. The threshold is low. A court hearing a disputed petition ordinarily determines whether that threshold is met, rather than conclusively resolving the underlying debt, authority or governance issues. A cross-claim may prevent standing where it amounts to a set-off equal to or exceeding the petition debt. A cross-claim falling short of a set-off is relevant to the court’s discretion in disposing of the petition. Abuse of process arising from forged evidence may justify striking out, but only in exceptional and proportionate circumstances.

Anthony McGann presented a winding-up petition against a charitable company limited by guarantee under Insolvency Act 1986 provisions, claiming approximately £18,755 for legal and accountancy services which he said he had paid on the company’s behalf. The company disputed that the services were supplied to it, that its directors had authorised reimbursement, and that the alleged debt was genuine. It relied also on a retrospective alteration to an invoice and a speculative cross-claim based on alleged fiduciary breaches.

The central issue was whether the company had shown a bona fide dispute on substantial grounds as to the petition debt, such that the petitioner lacked standing or the petition should otherwise be dismissed.

1. Petition dismissed. The company had shown a bona fide dispute on substantial grounds as to the alleged indebtedness. The petitioner therefore lacked the necessary creditor status for the purposes of Insolvency Act 1986 provisions.
2. The test was not whether the petitioner would ultimately succeed in an ordinary action. The court had to decide whether the dispute was genuine and substantial. The threshold imposed a low bar on the company, particularly in light of the Charity Commission’s intervention, the information obtained during its inquiries and uncertainty surrounding the appointment of the current directors.
3. The altered invoice justified treating the petitioner’s evidence with considerable caution and seeking independent corroboration. Nevertheless, striking out the petition solely for abuse of process would have been disproportionate. The circumstances differed from Arrow Nominees v Blackledge [2001] BCC 591, and the exceptional and proportionate nature of the jurisdiction was confirmed by Summers v Fairclough Homes Ltd [2012] 1 WLR 2004.
4. There were substantial grounds for disputing whether the relevant directors and trustees had been validly appointed, whether the putative resolution authorising reimbursement bound the company, and whether the services had been provided for the company rather than individuals or another entity. Those matters could not be conclusively determined on a disputed petition, particularly on limited and largely interested evidence.
5. A cross-claim based on alleged de facto or shadow directorship was too speculative, standing alone, to defeat the petition. If it amounted to a set-off equal to or exceeding the petition debt, standing would remain in issue. Otherwise, it could be considered in the court’s discretion under Re Bayoil SA [1998] BCC 988.
6. Additional submissions sent after the hearing were not considered because no compelling reason had been shown and the points could have been advanced during the hearing, applying the guidance in R (MH (Eritrea) v Secretary of State for the Home Department [2023] 1 WLR 482.