Blue Rock Capital Limited v Miride Management Limited

An injunction restraining presentation of a winding-up petition should be granted where the alleged debt is disputed on substantial grounds and the dispute is advanced in good faith. The evidential threshold is not particularly high. A court should not reject sworn evidence merely because it lacks contemporaneous documentation, unless the evidence is inherently or manifestly incredible or is contradicted by contemporaneous documents. Where undisputed or potentially disputed cross-claims exceed the debt in the statutory demand, the court may find substantial grounds without resolving every subsidiary dispute.

Blue Rock Capital Limited applied to restrain Miride Management Limited from presenting a winding-up petition concerning alleged unpaid rent of £53,876 under a Company Let Agreement. The applicant relied on alleged oral agreements concerning rent adjustments, payment of initial rent and an arrangement under which personal liabilities owed by Miride’s controller would be discharged through payments to Miride.

The respondent denied those agreements and challenged the evidence concerning the alleged loans, vehicle exchange and rent arrangements. The central issue was whether the applicant had shown, in good faith, that the alleged debt was disputed on substantial grounds.

1. Application granted. The applicant established that the alleged rental debt was disputed on substantial grounds, and an injunction restraining presentation of the winding-up petition was granted.
2. The parties agreed the applicable test. The court considered whether the debt was disputed on substantial grounds and in good faith. The threshold is not particularly high.
3. There were genuine disputes concerning the first two months’ rent, the alleged oral agreement, the vehicle exchange and the amount personally owed by Mr Gill to Mr Ghosal. The alleged personal liabilities, apart from the vehicle-deficit claim, exceeded the amount claimed in the statutory demand. It was therefore unnecessary to resolve the dispute concerning the first two rental payments and waiver.
4. The absence of contemporaneous documentation was unsatisfactory but was not decisive. Given the informality in the parties’ dealings and the absence of clear or decisive WhatsApp evidence, Mr Ghosal’s sworn evidence could not be rejected unless it was inherently or manifestly incredible, or rendered incredible by contemporaneous documents. That standard was not met.
5. The evidence did not safely establish that the alleged oral agreement was impossible or incredible. The applicant therefore satisfied the substantial-grounds requirement.