[1a] In PGH Investments Ltd v Sean Ewing [2021] EWHC 533(Ch), Deputy ICC Judge Passfield referred, at paragraph 33, to these as: '...the well-known adverse consequences that would flow from advertisement, including the freezing of the company's bank accounts and potentially significant reputational damage.'

In In Re A Company (No 006798 of 1995) [1996] 1 WLR 491, a construction case, Chadwick J said, at 505/506:

'It is a feature of the winding up process that the presentation of a petition may have very serious consequences for the company against which it is presented whether or not, on the hearing of the petition, it is held the petitioner is entitled to a winding up order. Those consequences arise by virtue of the provisions of sections 127 and 129 of the Insolvency Act 1986. Section 129(2) provides that, in the absence of some prior resolution for voluntary winding up, if a winding up order is eventually made, the winding up of a company is deemed to commence at the time of the presentation of the petition for winding up, and section 127 provides that where a winding up order is eventually made any disposition of a company's property made after the commencement of a winding up is, unless the court otherwise orders, void.

The effect is that a person dealing with the company after a petition has been presented is at risk that any disposition of the company's property effected in the course of that dealing will be held void if a winding up order is eventually made. In practice, once a third party comes to know of the presentation of a petition, it may very well refuse to have further dealings with the company until the petition has been disposed of. It is common for a company's banker to freeze its bank account once the bank learns of the presentation of a petition.

It is, perhaps, for that reason, amongst others, that a petition may not be advertised during a period of seven days from service on the company. A company upon whom a winding up petition is served, or against whom a petition is threatened, must pay the debt, or must incur the expense of an application to strike out or to restrain presentation of the petition. If the company allows the petition to be advertised then there is a serious danger that the damage that will be done to the company by the advertisement will far outweigh any commercial advantage in disputing a genuinely disputed debt. Those facts lead to the opportunity for abuse. The presentation of the petition, or the threat to present the petition, imposes on the company a commercial pressure which is different in kind from the issue of a writ. It is, of course, that opportunity to exert commercial pressure which leads to the creditor's decision to present a petition rather than to take proceedings in the official referees' corridor.'

A separate matter, is that the petitioner owes the company no common law duty of care for its conduct in the litigation, so a company harmed by the petitioner's behaviour in litigation cannot sue for damages from breach of a common law duty of care. In Business Computers International Ltd v Registrar of Companies [1988] Ch. 229 ('Business Computers'), Scott J heard an application by a former petitioner, for an order, striking out a claim brought by a company (former respondent to a winding up petition). The petitioner had presented a winding up petition against the company, but had addressed and served the petition, in error, at the wrong address. The petition was advertised and at a hearing a winding up order was made. Subsequently, the company learnt of the winding up order, and successfully applied to have it set aside. The company then issued an ordinary civil claim against the former petitioner for damages said to have been caused by the winding up order. As stated, the petitioner applied to strike out the claim - arguing that it disclosed no reasonable cause of action.

Scott J acceded to the application and struck out the claim. Scott J stated, at 240-241:

'...the damage of which the [company] complains was caused by the legal process instituted by the [former petitioner] and by the winding up order made by the court. Damage of this character is not, in my judgment, apt to be remediable in an action based on tortious negligence.

In my judgment, there is no duty of care owed by one litigant to another as to the manner in which the litigation is conducted, whether in regard to service of process or in regard to any other step in the proceedings. The safeguards against impropriety are to be found in the rules and procedure that control the litigation and not in tort.'

Separately, falsity of evidence given in judicial proceedings (for instance, the verification of the petition by an affidavit sworn) cannot be the foundation for a civil claim (see Scott J in Business Computers, at 235)

If there is malice or, it seems, improper motive, the situation is different. Scott J said, in Business Computers, at 235:

'In Radivojevic v. L.R. Industries Ltd. (unreported), 22 November 1984; Court of Appeal (Civil Division) Transcript No. 514 of 1984...May LJ said:

"Although such a claim does not come frequently before the courts, an action does lie in respect of injury to reputation caused by maliciously and unreasonably commencing liquidation proceedings against a company, or bankruptcy proceedings against an individual. It is necessary to show, first, that the proceedings terminated favourably in favour of the plaintiff; secondly that there was absence of reasonable and probable cause for bringing them; and thirdly, that there was malice or improper motive."

'It is implicit in the decision that the commencement of bankruptcy proceedings or the presentation of a winding up petition cannot found an action in damages unless associated with malice.'

In Partizan Ltd v OJ Kilkenny & Co Ltd [1998] B.C.C. 912 (1997) '(Partizan'), Rimer J (922) relies upon May LJ and Slade LJ's judgments in Radivojevic for the ingredients for the tort.

Partizan is also interesting procedurally. In Partizan a creditors (Kilkenny) compulsory winding up petition was dismissed (as the debt was disputed on substantial grounds). The respondent company (Partizan) to that petition, asked Ferris J to '...give directions as to the making of a claim by [the respondent company] in the same proceeding for damages against [the former petitioner] for the malicious presentation of the petition' (917). Ferris J '...expressed the view that he had never heard of that being done' (917), but was later persuaded to grant leave '...to make an application to the registrar in the existing proceedings for damages against [the former petitioner] for malicious presentation of the petition...' (917). Subsequently, the application came before Rimer J.

The respondent company' counsel argued (919), amongst other points, that the words ‘any other order that it thinks fit’ in s.125(1) of the Insolvency Act 1986 '...empowered Ferris J to authorise [the respondent company] to make its present claim by ordinary application in the then existing proceedings.' but Rimer J rejected this. Rimer J said, at 919:

'In my judgment, those words are intended to do no more than to confer upon the court the widest jurisdiction to make appropriate orders for the disposal one way or another of the petition itself. They cannot naturally be interpreted as empowering it also to give directions as to the bringing of separate claims in the Companies Court for damages in tort arising out of the circumstances in which the petition came to be presented in the first place. They cannot naturally be interpreted as empowering it also to give directions as to the bringing of separate claims in the Companies Court for damages in tort arising out of the circumstances in which the petition came to be presented in the first place. I can see no reason at all why they should be interpreted as having the width which [counsel for the respondent company] seeks to attach to them. There is simply no need. If the company considers that it has a claim in tort for the malicious presentation of the petition, then the procedure for pursuing it is comprehensively covered in the RSC, and the company's proper course, if it chooses to proceed in the High Court, is to issue a writ. In my judgment, s. 125(1) does not confer any jurisdiction on the court to give directions for the making of such claims by way of an application made in the proceedings commenced by the petition.' [RSC has since been replaced by the CPR].

In the event, because the former petitioner had not promptly applied to have the application struck out, the irregular way of pursuing the claim was allowed to proceed to determination on the merts (921 + 923)

See also the bankruptcy case of Jacob v Vockrodt [2007] BPIR 1568, where HHJ Coulson sitting as a Judge of the High Court said, at 32 and 33, under the general heading 'The Relevant Legal Principles':

'D1 General

32. An action lies in respect of injury caused by the malicious and unreasonable commencement of bankruptcy proceedings against an individual: see Gregory v. Portsmouth City Council [2000] 1 AC 419 at 427, House of Lords. Such an action shares many similarities with the tort of malicious prosecution, under which head a number of the relevant authorities occur. The tort of malicious presentation of a bankruptcy petition was described in Gregory as an exceptional class of civil proceedings which would not be extended and could be regarded as something of an anomaly.

D2 The Necessary Elements

33. There are five elements to a successful claim of this type. They are:

(a) the presentation of a bankruptcy petition;

(b) the termination of that petition in favour of the party against whom it was made;

(c) the absence of reasonable and probable cause for the presentation of that petition;

(d) the malicious presentation of that petition;

(e) the identification of damage caused by the malicious presentation of that petition.'

The Judge then set out each of these 5 elements, from paragraph 34 to 44.

For collateral improper purpose, see: (1) Hall (Liquidator of Ethos Solutions Ltd) v Nasim [2021] EWHC 142 (Ch); [2021] B.P.I.R. 550, where ICCJ Barber said, at paragraph 30:

'It is ... an abuse of process to pursue a claim for an improper collateral purpose. However, what is an improper collateral purpose is not easy to define and few cases have been struck out solely on this basis: see Goldsmith v Sperrings Ltd 1977 1 WLR 478 CA per Bridge LJ.'

In Goldsmith v Sperrings Ltd [1977] 1 W.L.R. 478, Bridge LJ said, at 503B to 503H:

'[Counsel for the distributors] relied, in support of the submissions which I have summarised in paragraphs 1 and 2 above, on the dictum of Lord Evershed M.R. in In re Majory [1955] Ch. 600, 623:

"The so-called ' rule' in bankruptcy is, in truth, no more than an application of a more general rule that court proceedings may not be used or threatened for the purpose of obtaining for the person so using or threatening them some collateral advantage to himself, and not for the purpose for which such proceedings are properly designed and exist; and a party so using or threatening proceedings will be liable to be held guilty of abusing the process of the court and therefore disqualified from invoking the powers of the court by proceedings he has abused."

For the purpose of Lord Evershed's general rule, what is meant by a " collateral advantage "? The phrase manifestly cannot embrace every advantage sought or obtained by a litigant which it is beyond the court's power to grant him. Actions are settled quite properly every day on terms which a court could not itself impose upon an unwilling defendant. An apology in libel, an agreement to adhere to a contract of which the court could not order specific performance, an agreement after obstruction of an existing right of way to grant an alternative right of way over the defendant's land - these are a few obvious examples of such proper settlements. In my judgment, one can certainly go so far as to say that when a litigant sues to redress a grievance no object which he may seek to obtain can be condemned as a collateral advantage if it is reasonably related to the provision of some form of redress for that grievance. On the other hand, if it can be shown that a litigant is pursuing an ulterior purpose unrelated to the subject matter of the litigation and that, but for his ulterior purpose, he would not have commenced proceedings at all, that is an abuse of process. These two cases are plain; but there is, I think, a difficult area in between. What if a litigant with a genuine cause of action, which he would wish to pursue in any event, can be shown also to have an ulterior purpose in view as a desired byproduct of the litigation? Can he on that ground be debarred from proceeding? I very much doubt it. But on the view I take of the facts in this case the question does not arise and it is neither necessary nor desirable to try to lay down a precise criterion in the abstract.

In Re Swindon Town Football Co Ltd [2022] EWHC 2071 (Ch), Deputy ICC Judge Baister said, at paragraph 35:

'...the presentation of a petition by a person who has an undisputed debt will only be an abuse in two situations:

"The first is where the petitioner does not really want to obtain the liquidation or bankruptcy of the company or individual at all, but issues or threatens to issue the proceedings to put pressure on the target to take some other action which the target is otherwise unwilling to take. The second is where the petitioner does want to achieve the relief sought but he is not acting in the interests of the class of creditors of which he is one or where the success of his petition will operate to the disadvantage of the body of creditors" (Maud v Aabar Block Sarl (supra)).

The reference to here is to Maud v Aaber Block Sarl [2015] BPIR 819

[1b] For a case where the petition was warranted, see Micom International Ltd v HTS TEL Ltd [2014] EWHC 4455 (Ch) ('Micom'), a decision of HHJ Pelling KC sitting as a Judge of the High Court. In Micom, the company applied for an injunction restraining (amongst other things) presentation of a creditors winding up petition. The company argued that (a) there was a bona fide dispute, on substantial grounds, as to the debt which was to found the (threatened) winding up petition; and (b) a governing law clause (to UAE) mean the English Court could not determine the issue. The application for the injunction failed as each (a) and (b) argument failed.

It would be proper for the would be petitioner to present and pursue the (threatened) winding up petition; any harm to the company (in particular, from advertisement of the petition), would not be unwarranted.

[2a] Three points here:

(1) It is the company's right, not the right of any director or shareholder of the company, to make the application;

(2) those who cause the company to issue and pursue an application for an injunction, must have authority to so act for the company. In Rushbrooke UK Ltd v 4 Designs Concept Ltd [2022] EWHC 1110 (Ch), HHJ Paul Matthews (sitting as a Judge of the High Court) struck out the company's application '...on the basis that the director of the applicant who gave instructions to the solicitors to launch these proceedings had no authority on behalf of the company to do so...' (paragraph 2); and

(3) a company subject to a general civil restraint order must first comply with the permission requirements in the general civil restraint order, before applying for an injunction to restrain presentation or advertisment of a winding up petition. 

The first and third points were addressed by Snowden J in (1) Christine Harper (2) Shorts Gardens LLP v London Borough of Camden Council; Preston City Council (re Saint Benedict's Land Trust Ltd) [2020] EWHC 1001 (Ch) (Saint Benedict's).

(1) In Saint Benedict's, an application was made for an injunction restraining the presentation of a petition against Saint Benedict's Land Trust Ltd (the 'SBLT Petition'), but it was not made by the company ('SBLT') itself, but by a director/trustee of SBLT (a company incorporated under the Co-operative and Community Benefit Societies Act 2014).

Snowden J posed the question, at paragraph 14, '...whether an application can be made by [the director/trustee applicant] to restrain presentation of a petition against SBLT at all..'

Snowden J said, at paragraphs 15 - 21:

'[The director/trustee's] application expressly states that it is made under r.7.24(1) Insolvency (England and Wales) Rules 2016. That provides,

"An application by a company for an injunction restraining a creditor from presenting a petition for the winding up of the company must be made to a court having jurisdiction to wind up the company." (emphasis added)

Rule 7.24(1) does not envisage an application for an injunction being made by any person other than the company. That is not surprising. In general, an injunction will only be granted where there is a threat to do an act which constitutes an invasion of a legal or equitable right of the applicant: see e.g. Fourie v Le Roux [2007] 1 WLR 320 at [25]-[30].

In the context of winding up proceedings, an injunction is granted to restrain the presentation of a winding up petition where the debt is genuinely disputed on substantial grounds. The reason for that is that under the Insolvency Act 1986, a creditor's winding up petition can only be presented by a creditor; that until a person has established that they are a creditor they are not entitled to invoke the statutory process; and the winding up procedure is not for the purpose of deciding a disputed debt: see Stonegate Securities v Gregory [1980] Ch 576 at pages 579-580 referring to Mann v Goldstein [1968] 1 WLR 1091 at pages 1098-1099. The legal right being invaded in such a case is the right of a company not to be subjected to the statutory winding up process other than at the instigation of an undisputed creditor. But that is the company's right, not the right of any director or shareholder.

What [the director/trustee applicant] contends in her statement – and [Counsel for SBLT] reiterated in submissions – was that as a director and shareholder [the director/trustee applicant] would be affected by a petition to wind-up the company and that she should therefore be regarded as having a sufficient interest in the subject-matter of the case so as to justify the grant of an injunction. When pushed on the nature of that interest, however, [Counsel for SBLT] could not point to any additional factors that went beyond the mere holding of office as a director or the holding of shares.

I do not consider that the mere holding of office as a director or the holding of shares in a company gives an individual a sufficient personal interest to apply for an injunction to prevent winding up proceedings being commenced against the company.

A director is an office-holder with powers and duties owed to the company under the company's constitution and the general law, and who may be given authority to act as agent on the company's behalf. But directors are not personally entitled to any remuneration or other benefit simply by virtue of holding office.

A share is a piece of property which consists of a bundle of rights against the company and the other shareholders under the company's constitution, but the making of a winding up order does not deprive the shareholder of his shares. It is simply that different rights apply under the company's articles in a winding up, and the shares may be valueless if the company has insufficient assets to pay its liabilities in full.'

Counsel for SLBT relied upon Mann v Goldstein, but Snowden J said, at paragraph 22:

'I do not consider that this case supports his proposition that holding office or shares gives a person an individual right to apply for an injunction.'

See further, paragraphs 23 - 26 of Saint Benedict's, on respresentative actions.

(2) SLBT was already subject to a live General Civil Restraint Order ('GCRO'), not subject to appeal. Snowden J stated at paragraph 30, that:

'...the GCRO plainly does prevent SBLT from making a pre-emptive application to restrain presentation or applying in the winding up proceedings to restrain the advertisement of a petition without first obtaining the permission of the nominated judge to do so.' [underlying in judgment]

At paragraphs 35 and 36, Snowden J said:

'I can see that the mechanics for giving notice to the other parties and making an application to the nominated judge for permission under a GCRO do not easily lend themselves to a situation where the company may have a limited time to apply to prevent the presentation or advertisement of a winding-up petition. But that is the consequence of the company incurring a civil restraint order by making repeated applications that are totally without merit, and the company only has itself to blame.

Accordingly, in my judgment SBLT would clearly be barred by the GCRO from making an application either to restrain presentation of a winding up petition against it or from making an application to restrain advertisement of an existing petition unless it has first followed the procedure under the GCRO for giving notice to Camden and Preston and then has obtained the permission of the nominated judge.'

A company subject to the winding up petition can defend itself (without seeking permission under the GCRO) when the winding up is heard in the normal way. Snowden J said in Saint Benedict's, at paragraph 30, after referring to Neuberger J in Glyn v Mathew (unreported). 

'To apply Neuberger J's point, the GCRO does not require SBLT to obtain permission merely to defend the winding up petition brought against it. That it is entitled to do by putting in evidence in opposition and appearing at the hearing of the petition to argue that the order should not be made. But the GCRO plainly does prevent SBLT from making a pre-emptive application to restrain presentation or applying in the winding up proceedings to restrain the advertisement of a petition without first obtaining the permission of the nominated judge to do so.'

Snowden J in Camden LBC v St Benedict's Land Trust Ltd [2019] EWHC 3576 (Ch) said, at paragraph 69:

'A civil restraint order does not prevent a person from defending themselves in court proceedings by, for example, filing a defence, or evidence seeking to resist an order being made against them: c.f. Sartipy v Tigris at [31] in relation to what constitutes a claim or application for the purposes of determining whether the jurisdiction to make a civil restraint order is made out. A civil restraint order does, however, seek to prevent a defendant from making improper and meritless applications with a view to derailing or disrupting proceedings brought against it.'

Combining the above two issues, Snowden J said, at paragraph 39:

'In any event, whatever reason has been given, it is obvious that a civil restraint order against a company should not be capable of being evaded, or its efficacy diminished, by the simple expedient of a director or shareholder making the application instead of the company. Whatever [the director/trustee applicant's] alleged motivation, in my judgment her application was a clear abuse of process.'

[2b]  One prelude to a winding up petition being presented against a company, is for the would-be petitioner to serve a statutory demand on the company. In corporate insolvency, serving a statutory demand is but only one way of attempting to show 'the company is unable to pay its debts...' under section 122(1)(f) and s123 of the Insolvency Act 1986.

Where a company receives a statutory demand, there is no procedure, like with personal insolvency, for the recipient (the statutory demandee) to apply to Court for an order setting aside the statutory demand. In Corporate Insolvency: Law and Practice, 5th Edition, paragraph 14:44, footnote 1, the authors state that ‘There is no procedure similar to that in bankruptcy for applying to set aside the statutory demand (IR 2016 r.10.4). The proper course of action is to seek the restraint of the petition by way of application (IR 2016 r.7.24)'

As an aside, statutory demands tend to be used much in personal insolvency than in corporate insolvency. In personal insolvency, sectio 268 of the Insolveny Act 1986, entitled 'Definition of “inability to pay”, etc.; the statutory demand' applies, requiring either:

(a) a statutory demand (section 268(1)); or

(b) execution or other process on a judgment debt, along with it returning unsatisfied in whole or in part.

'For the purposes of section 267(2)(c), the debtor appears to be unable to pay a debt if, but only if, the debt is payable immediately and either-
(a) the petitioning creditor to whom the debt is owed has served on the debtor a demand (known as “the statutory demand”) in the prescribed form requiring him to pay the debt or to secure or compound for it to the satisfaction of the creditor, at least 3 weeks have elapsed since the demand was served and the demand has been neither complied with nor set aside in accordance with the rules, or
(b) execution or other process issued in respect of the debt on a judgment or order of any court in favour of the petitioning creditor, or one or more of the petitioning creditors to whom the debt is owed, has been returned unsatisfied in whole or in part.'

On execution or other process, and returning unsatisfied, see: (i) Re a Debtor (No.340 of 1992) [1996] 2 All E.R. 211; and (ii) Skarzynski v Chalford Property Co Ltd [2001] BPIR 673.

[3] An alternative label would be ‘prospective petitioner’.

[4a] Under section 124(1) of the Insolvency Act 1986, a winding up petition may be presented by: (1) the company; (2) the directors of the company; (3) any creditor or creditors (including contingent or prospective creditor or creditors); (4) any contributory or contributories; (5) a liquidator or temporary administrator appointed in main proceedings opened in another EU member state pursuant to arts 3(1) and 52 of Regulation (EC) 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings, who wishes to open secondary proceedings in the United Kingdom; (6) a designated officer of a Magistrates Court in exercise of the power conferred by s.87A of the Magistrates Court Act 1980; (7) all or any of those parties together or separately. (8) Secretary of State under s.122(1)(b) or (c) or on grounds of public interest; (9) the Regulator of Community Interest Companies; (10) an administrator; (11) an administrative receiver; (12) the supervisor of a CVL; (13) Director of Public Prosecutions or the Director of the Serious Fraud Officer, on public interest grounds; (14) Financial Conduct Authority and Prudential Regulation Authority, on the ground of inability to pay debts or on the ‘just and equitable ground’; (15) Official receiver, where company then in CVL. 

[4b] See for an example, Re Glocin Ltd Glocin Ltd v Bancibo SE [2022] EWHC 1858 (Ch), wherein ICC Judge Barber heard an application by a company facing an extant creditors winding up petition, for an order 'to strike out the Petition as an abuse of process and/or to restrain advertisement' (paragraph 2(1))

For more examples, see: (1) Winnington Networks Communications Ltd v Revenue and Customs Commissioners [2015] BCC 554; and (2) Re Taylor's Industrial Flooring Ltd [1990] BCC 44 ('Re Taylor's Industrial').

In Tallington Lakes Ltd v Ancasta International Boat Sales Ltd [2014] BCC 327, the Court of Appeal heard an appeal by a petitioner against an order striking out its winding up petition against an alleged debtor. As to the test to be applied on an application to strike out a winding up petition because the debt founding the petition is said to lack the substantiality, David Richard J said, at paragraph 4:

'If the company can demonstrate that the alleged debt on which the petition is founded is genuinely disputed on substantial grounds, the court will strike out the petition. There are rare exceptions to this principle...'

Note Dillon LJ in Re Taylor's Industrial, at 47-48, where he said:

‘The company obtained from His Honour Judge O'Donoghue an injunction restraining advertisement of the petition on the ground that the debt claimed was disputed and the company was solvent. The judge's order striking out the petition was on the inter partes hearing following that ex parte injunction, but because the petition (because of the injunction) had not been advertised, it was not fully before the court for hearing as the other creditors had not had the opportunity, which the rules require, to put forward their views on whether they supported or opposed the petition.’

This feeds into a distinction that needs to be borne in mind - between: (1) applying for, and obtaining, an order striking out the petition before it reaches a final hearing on the petition (or at least before the petition is substantively determined) - this is an interim application; and (2) a final order made at the final hearing of the substantive petition, dismissing the petition. 

[5] Strictly speaking, any natural or legal person may present a winding up petition, though certain classes of person may have to meet additional requirements – for instance, those declared ‘vexatious litigants’  

[6] The Chancery Division Companies Court has, relatively, recently been replaced by the Business and Property Court, Insolvency and Company List (ChD). For brevity, this court will be referred to in this article as ‘Companies Court’

[7] See for example, see Coilcolour Ltd v Camtrex Ltd [2015] EWHC 3202 (Ch)

[8] See endnote 5

[9] The application for an injunction is governed by Insolvency Rules 2016, r.7.24. R.7.24 is entitled ‘Injunction to restrain presentation or notice of petition’ and reads:

‘(1) An application by a company for an injunction restraining a creditor from presenting a petition for the winding up of the company must be made to a court having jurisdiction to wind up the company.

(2) An application by a company for an injunction restraining a creditor from giving notice of a petition for the winding up of a company must be made to the court or hearing centre in which the petition is pending.’

[10] For instance, see (1) Coilcolour Ltd v Camtrex Ltd [2015] EWHC 3202 (Ch); (2) Barrowfen Properties Limited v Hambros Investments Limited, Anupam Investments Limited [2019] EWHC 2548 (Ch); or (3) Ensygnia Ltd v Rickard [2014] EWHC 1184 (Ch); (4) Re A Company (No 0160 of 2004) [2004] EWHC 380; (5) In re A Company (No. 0012209 of 1991) [1992] 1 W.L.R. 351; (6) Mulalley and Company Limited v Regent Building Services Limited [2017] EWHC 2962 (Ch); (7) GBM Minerals Engineering Consultants Ltd v Michael Wilson & Partners, Limited [2018] EWHC 3401 (Ch); (8) Re Company 0254/2015 [2015] EWHC 2144 (CH),

[11a] For instance, see: (1) Mann v Goldstein [1968] 1 WLR 1091, where the petitions had been presented, and the company’s application was to retain the petitioners from advertising or taking any further steps in the prosecution of the respective petitions; (2) Re A Company [2016] EWHC 1548 (Ch), where an application for orders (i) restraining the respondent from proceeding further upon the petition, whether by advertising it or otherwise; and (ii) orders that the petition be removed from the court file, were refused by HHJ Hodge QC, sitting as a Judge of the High Court. The Judge found the petitioner has made out the case that she was a creditor of the applicant LLP in a sum ‘…considerably in excess of the insolvency limit of £750.’ (paragraph 17); (3) Agform Ltd v Fine Organics Ltd [2018] EWHC 2211 (Ch), where the company applied (unsuccessfully) for an injunction to restrain a threatened petition. The Companies Court found, at paragraph 79, that company's dispute to the debt was '...not substantial such as to give rise to a dispute requiring the court to dismiss the petition, nor are the cross-claims genuine and serious within the relevant test as requiring the court to dismiss the petition.'; (4) Re A Company [2016] EWHC 3811; (5) JSF Finance & Currency Exchange Co Ltd v Akma Solutions Inc [2001] 2 BCLC 307 ('JSF Finance');

It is nothing to the point that an application for an injunction could have been made pre-presentation of the petition. In JSF Finance, the petitioner served a statutory demand on the company. The company did not then apply for an injunction restraining presentation of a petition. The petitioner then presented the petition and the company applied to the Companies Court for orders (1) that the petitioner be restrained from proceeding further upon the winding up petition, whether by advertising the same or otherwise; and (2) that the petition be removed from the file of proceedings (which is not the same as dismissal). The company argued the debt founding the petition was genuinely disputed on substantial grounds. 

During the injunction application hearing, the petitioner sought to make a point about the company not applying for an injunction prior to the winding up petition being presented. Park J in JSF Finance dealt with that argument, at 309:

'When [the company] received the statutory demand it could have applied to the court for an order restraining [the petitioner] from petitioning for a winding up. It did not do that. [Counsel for the petitioner] seeks to make something of its omission in that respect. In my view, however, there is nothing to be made of it. If there is a genuine and substantial dispute about the alleged debt, [the company] is entoled to seek the releif which it is seeking now. Indeed, applications of this sort, brought at the stage after a petition has been presented, are not uncommon.'

[11b] 'advertise' has two meanings. In Sealy & Milman: Annotated Guide to the Insolvency Legislation 26th Ed. - 2023, in the commentary entitled 'General Note to r.7.4 to 7.12', the learned authors put it this way:

'The word “advertised” (and in this context, “notice”) has two meanings: (1) a paid announcement in a general publication; and (2) notifying the existence of the matter in question. Where the court has made an order restraining the advertisement of a winding-up petition, the word is to be construed in a wide sense, and any communication to an unauthorised party (e.g. informing the company’s bank) of the fact that the petition has been presented will be a breach of the order'

In other words, in an injunctive order restraining 'advertisement' or 'advertising' - the word 'advertisement' or 'advertising' is given a wide meaning. It prohibits any notification being given to any unauthorised third parties about the presentation/existence of the winding up petition. The prohibition is not limited to not putting an advert in the Gazette.

In Re a Company No. 00687 of 1991 [1991] BCC 210, Harman J deal with a case where:

(1) there had been 'an ordinary contributory's petition under sec. 459, although coupled...with an application for a just and equitable winding up' (paragraph 1)

(2) a registrar had '...made the normal form of order that there be no advertisement of the petition without further order...' (paragraph 1), as well as section 127 order, validating any '...payments into and out of the company's bank account in the ordinary course of business between presentation and judgment...' (paragraph 1);

(3) the solicitors for the petitioner had written to Barclays Bank, the branch at which the respondent/company had a bank account, and had stated (paragraph 2)

'“We write on behalf of our client to bring to your attention the fact that he has presented a petition which seeks, amongst other things, the winding up of the company…”

Harman J said:

'That sentence plainly adverts to the petition seeking a winding up when an order had been made that no advertisement of that petition should be made.' (paragraph 3);

and

'The result was that the bank – quite wrongly in view of the sec. 127 order which had been made – froze the company's bank account. In my judgment, that would not have happened had the solicitors omitted the reference to the petition to the court seeking a winding-up order. With respect to them, it was not a necessary statement...the reference to a winding up was one which was unnecessary, I believe, and, in my judgment, was, although I accept inadvertently, a breach of the registrar's order that there be no advertisement of the petition.'

See also Re Doreen Boards Ltd [1996] 1 BCLC 501.

[11c] Advertisement of the petition is permitted/required only within prescribed time limits. Insolvency Rules 2016, r.7.10(4) is the important part but, for completeness, r.7.10, entitled 'Notice of petition', is set out in full below:

'(1) Unless the court otherwise directs, the petitioner must give notice of the petition.

(2) The notice must state–

(a) that a petition has been presented for the winding up of the company;

(b) in the case of an overseas company, the address at which service of the petition was effected;

(c) the name and address of the petitioner;

(d) the date on which the petition was presented;

(e) the venue fixed for the hearing of the petition;

(f) the name and address of the petitioner’s solicitor (if any); and

(g) that any person intending to appear at the hearing (whether to support or oppose the petition) must give notice of that intention in accordance with rule 7.14.

(3) The notice must be gazetted.

(4) The notice must be made to appear–

(a) if the petitioner is the company itself, not less than seven business days before the day appointed for the hearing; and

(b) otherwise, not less than seven business days after service of the petition on the company, nor less than seven business days before the day appointed for the hearing.

(5) The court may dismiss the petition if notice of it is not given in accordance with this rule.'

Business days mean Saturday, Sunday and Public Holidays are excluded. 

The reason why this window of time exists, was neatly put in the relatively old case of Re Signland [1982] 2 All ER 609 ('Signland'), wherein Slade J said of the introduction of the delayed advertisment rule:

'...the principal reasons why the rules have directed that advertisement shall take place not less than seven clear days after service on the company are (1) to give a company served with a winding-up petition the opportunity to discharge the debt in question, if it is undisputed, before advertisement takes place, with all the necessarily potentially damaging consequences to the company, and (2) to enable the company, if it wishes to dispute the debt, to apply to the court to restrain advertisement. As a matter of indulgence, however, it has been my practice during this term to accept premature advertisement where it has taken place less than seven clear days after service on the company and the company has not appeared to take the point.'

In Re Roselmar Properties Ltd [1986] Lexis Citation 1118; [1986] BCC 99, 156 ('Roselmar'), Harman J summarised this, without demur.

Premature advertisement is contrary to the rules:

(1) In Roselmar, Harman J said:

'In this matter the petition was presented on 13th January and answered for today. Upon the papers being checked in chambers it appeared that the petition was advertised only four days after service. That, of course, is in breach of the Rules of the Companies Court, which now provide that seven clear days must elapse between service and advertisement. The matter is of considerable significance because the winding-up rules were deliberately changed in order, as Mr Justice Slade (as he then was) said in Re Signland Ltd [1982] 2 All ER 609 G-H, firstly that a company which did not dispute the debt could pay off the debt before advertisement, because the court knows very well how damaging advertisement is. Secondly, to enable the company, if it disputed the debt, to apply to restrain advertisement and to put before the court the substantial grounds upon which the debt is said to have been disputed.'

(2) In Signland, the breach was more significant, because advertisement occured before the petition had even been served. This warranted, as against the petitioner, the petition being struck out. Slade J started by stating:

'This is a petition seeking the usual compulsory winding-up order in respect of a company, Signland Ltd. It was presented by Billing & Sons Ltd, the petitioner, on 5 January 1982. Rule 28 of the Companies (Winding-up) Rules 1949, SI 1949/330 (amended by SI 1979/209; SI 1981/1309), provides that, unless the court otherwise directs, every petition shall be advertised once in the London Gazette not less that seven clear days after it has been served on the company and not less than seven clear days before the day fixed for the hearing.'

[Note Rule 28 of the Companies (Winding-up) Rules 1949, SI 1949/330 (amended by SI 1979/209; SI 1981/1309) has subsequently been repealed]

'As a matter of indulgence, however, it has been my practice during this term to accept premature advertisement where it has taken place less than seven clear days after service on the company and the company has not appeared to take the point.'

Slade J continued later:

'In the present case, I understand, not only was there a failure to allow the company seven clear days after service of the petition before advertisement took place, but the advertisement in fact took place two days before the petition was served. Furthermore the company has appeared to take the point. While I am quite content to accept the assurance of counsel appearing on behalf of the petitioner to the effect that this breach of the rules was not deliberate, it seems to me to have been a flagrant and serious breach and one of a type which the court must take every step to discourage.

Rule 28(3) of the 1949 rules, which was recently added by the Companies (Winding-Up) (Amendment) (No 2) Rules 1981, SI 1981/1309, now expressly empowers the court to order the removal from the file of a petition if it is not duly advertised in accordance with r 28.

In the past, as I have indicated, I have not ordinarily exercised this power in cases where advertisement has been premature but the company has taken no objection. However, in none of the earlier cases before me, so far as I can remember, has advertisement actually preceded the presentation of the petition. To advertise before service of the petition appears to me not only an infringement of the rules but a serious abuse of the whole process of advertisement.

In the circumstances, I would ordinarily strike out this petition. But counsel for the Inland Revenue Commissioners has indicated that his clients, whose names appear on the list as supporting creditors, wish to be substituted as petitioners. Subject to further submissions, I propose to give them leave to be substituted and make the usual directions.

Advertisement gives constructive notice of the existence of the petition - see Re London, Hamburg and Continental Exchange Bank (1866) LR 2 Eq 231.

[11d] In Time GB Group Ltd v Yarwell Mill Country Park Ltd [2023] EWHC 1887 (Ch), ICC Judge Barber said, under the heading 'submissions and conclusions' and subheading '(1) Timing of Presentation', at paragraph 34:

'The first ground relied upon by the [company/applicant] in support of the strike-out limb of its application was the extraordinary proposition that the petition should not have been treated as having been presented in circumstances where the Company filed its application to restrain presentation before the date of presentation. On that basis, [counsel for the company/applicant] contended that the court should simply dismiss the petition: skeleton argument, paragraph 3. This was an utterly hopeless argument which I have no hesitation in rejecting. The mere filing of an application to restrain presentation of a petition does not of itself preclude presentation.'

[12a] This paragraph was quoted by Hildyard J in Coilcolour Ltd v Camtrex Ltd [2015] EWHC 3202 (Ch), at paragraph 31, under legal principles and in support, along with Mann v Goldstein [1968] 1 WLR 1091, for the proposition:

‘The court will grant an injunction to prevent presentation of a winding-up petition where it considers that the petition would be an abuse of process and/or that the petition is bound to fail (to the extent they are different):’

The authors of Sealy & Milman: Annotated Guide to the Insolvency Legislation 22nd Ed. - 2019, in their commentary to Insolvency Rules 2016, r.7.24, adopted this as their summary of the position. As did David Foxton QC, sitting as a Deputy Judge of the High Court in Re A Company [2016] EWHC 3811, at paragraph 7 (for all of paragraphs 31 to 33 of Coilcolour).

The application before the Companies Court in Re a Company No. 003028 of 1987 (1987) 3 BCC 575, was for an order striking out a winding up on just and equitable grounds petition, on the ground that the presentation of the petition and its future prosecution represented an abuse of process, or, on the alternative but associated ground, that the petition was bound to fail.

In Signature Living Hotel Ltd v Sulyok [2020] Bus. L.R. 588, HHJ Hodge QC sitting as a High Court Judge said, at paragraph 15:

'...I accept, that an injunction would be granted where a petition is bound to fail as a matter of law.'

[12b] For an authority on a company (unsuccessfully) applying for an injunction to restrain presentation of a creditors winding up petition, on (amongst others) the ground that the would-be petitioner would be pursuing it for ulterior purposes, see Astra Resources plc v Credit Veritas USA LLC [2015] EWHC 1830 (Ch) (23 June 2015)

[13] For an early statement on this see Cadiz Waterworks Co. v. Barnett (1874) L.R. 19 Eq. 182. In that case, there was a genuine dispute as to whether the debt was payable, and the company was solvent. Malins VC said (at 194 and 195):

‘…and I am satisfied it is a solvent company. Therefore, the company being solvent, and there being a bona fide dispute as to the debt, what injury am I doing (the petitioner) by restraining him from presenting a petition to wind up … … Here is a company perfectly solvent, which has a fair prospect, as far as I have heard, of being successful, and you have it advertised in every paper in England that there is a petition presented to wind them up … … I think this case does fall within the rule …. that the object of this Court is to restrain the assertion of doubtful rights in a manner productive of irreparable damage. I am satisfied that in this case the presentation of a petition may be productive of irreparable damage to this company.’

The last passage quoted was said by Willmer LJ in Charles Forte Investments Ltd. v. Amanda [1964] Ch. 240, to be of general application, although the latter case was not one of a creditor's petition.

[14] It has been posited in an old Australian case, that an insolvent company has no trading reputation or commercial credit which constitutes an interest which either will or ought to be protected by the law. In Community Development Pty Ltd v Engwirda Construction Company [1968] Qd R 541, Lucas J said, after referring to some old English cases about granting an injunction (546-547), that: 

‘In my opinion these cases show that the basis of the exercise of the jurisdiction is the irreparable injury which might be done to a solvent company by the presentation or prosecution of a petition by a person whose debt is genuinely disputed.

In this case there is no assertion by anybody on behalf of the company that it was solvent…What irreparable injury can then be done to an insolvent company by the advertisement of a petition for a winding up order?…’

[15] See also Oliver LJ in Claybridge Shipping [1997] 1 BCLC 572, where towards the end of his speech, he said:  

‘I do not wish in the least to cast doubt on the practice of the Companies Court – which is well-established – of staying a petition in circumstances where there is a bona fide and substantial dispute as to the existence of a debt and leaving it to the parties to fight the matter out between them in an action. But that is at highest, a rule of practice and it must, I think, give way to circumstances which make it desirable that the petition should proceed, although it may be that that would only apply in very exceptional circumstances.’

[16] In Re Russian & English Bank [1932] 1 Ch 663, Bennett J held that the case was an exceptional one. Though the debt was found to be disputed on substantial grounds, the petition was allowed to continue. This was because the bank, being incorporated under the laws of Russia, had ceased to exist under those laws before the petition was presented.

[17] In Re Claybridge Shipping Company SA [1997] 1 BCLC 572, Shaw LJ said, at 576e:

‘As to the rule of practice, I venture to emphasise that it is a rule of practice and not a rule of law. Accordingly it may be overborne in a particular set of circumstances where its application might result in injustice.’

After referring to practice of dismissing petition presented for abusive purposes, Oliver LJ said, at 579a: 

‘But, having said that, the refusal of the court to entertain cases where the underlying debt is said to be disputed is, in my judgment, a matter of practice only. It is not, in general, convenient that the very status of the petitioner to proceed with his petition should be fought out on a winding-up petition. But the court must, I think, remain flexible in its approach to such cases. There may well be cases where to compel the creditor to go off to another division of the court to establish his debt would effectively deprive him of any remedy at all. That may, of course, be inevitable where the court is convinced that the dispute is a genuine one, genuinely raised and persisted in, and one which cannot conveniently be determined in a short space of time on hearing the one application – and that, I think, must be particularly the case even in cases which can perhaps conveniently be dealt with where the grounds of dispute have been known to and canvassed with the petitioner well before the presentation of the petition. But it ought not, in my judgment, i (sic) to be an inflexible rule that the Companies Court should never take upon itself the burden of determining the matter on the hearing of the petition. It does so in petitions on the just and equitable ground, and it is only too easy for an unwilling debtor to raise a cloud of objections on affidavits and then to claim that, because a dispute of fact cannot be decided without cross-examination, the petition should not be heard at all but the matter should be left to be determined in some other proceedings. Whilst I do not in any way, therefore, seek to weaken the rule of practice as a general rule, I think that it ought not to be assumed to be inflexible and to preclude the Companies Court from determining the issue in an appropriate case simply because the debtor files mountains of evidence raising disputes of fact which require to be determined by cross-examination. The court must, I think, reserve to itself the right to determine disputes – even perhaps in some cases substantial disputes – where this can be done without undue inconvenience and where the position of the company, whether it be an English company or a foreign company, is such that the likely result in effect of striking out the petition would be that the creditor, if he established his debt, would lose his remedy altogether.’

On the facts of Claybridge, Oliver LJ held that the dispute was not substantial, only the volume of evidence. The petition allowed to proceed.

In Khan v Singh-Sall [2023] EWCA Civ 1119, CA ('Singh-Sall') Nugee LJ quoted from: (1) Re Claybridge Shipping Company SA [1997] 1 BCLC 572 (Singh-Sall, paragraph 38); and (2) Parmalat Capital Finance Ltd v Food Holding Ltd (In Liquidation) [2008] BCC 371, PC, Lord Hoffman, paragraph 9 (Singh-Sall, paragraph 39) with apparent approval, since he said that same approach applied to personal insolvency as well (Singh-Sall, paragraph 40), stating:

'In my judgement the same is true in bankruptcy. The normal practice of the Court is to dismiss a creditor's petition if the petitioner's debt is bona fide disputed on substantial grounds. ...this is a rule of practice rather than law, and the Court had power to entertain the [petitioning creditor's] petition. The dispute therefore on any view did not prevent the Court having jurisdiction to hear the petition.'

[18] In Brinds Ltd v Offshore Oil NL (1986) 2 BCC 98916, Lord Brightman delivered the judgment of the Privy Council. He said, at 98921:

‘It is a matter for the discretion of the judge whether a winding-up order should be made on a disputed debt, and it is also a matter of discretion whether he decides the substantive question of debt or no debt. Their Lordships agree with the observations of Gibbs J. in Re Q.B.S. Pty. Ltd. [1967] Qd. R. 218 , at p. 225:

“It seems to me that in every case it becomes necessary for the court to exercise its discretion as to how far it will allow the question whether or not the dispute is bona fide to be explored. In some cases it may be very easy to decide this question on the petition and affidavits in reply. In other cases however it may be difficult to determine whether or not the dispute is bona fide without determining the merits of the dispute itself. In some such cases convenience may require that the court decide the question whether or not a debt exists, but in other such cases it may appear better to allow that question to be determined in other proceedings before the petition for winding up is heard.”'

The same line of reasoning was adopted by this Board in an appeal from New Zealand, Bateman Television Ltd. v. Coleridge Finance Co. Ltd. [1971] N.Z.L.R. 929 at p. 932:

“…the general rule is, no doubt, that no order will be made on a petition founded on such debts. But each case must depend upon its own circumstances and it is a question for the discretion of the Judge; a discretion to be exercised judicially, which is not open to review …Their Lordships add the very important fact that from start to finish neither side ever suggested to Macarthur J. that the petitions should be dismissed or even stayed on the ground of disputed debts pending the bringing of appropriate proceedings at law to determine these matters.”

In the instant case, having regard to the nature of the dispute and the course which the proceedings took, it was almost inevitable that the trial judge should determine the question whether the debt was repayable on demand or only on 12 months' notice. As the Full Court observed,

“the question whether the debt was due and payable was … inextricably interwoven with the questions of the motives and purposes of Adler, and in turn, with the bona fides of Macintosh … Accordingly we are of opinion that once all the evidence was in, for the learned Judge to have then dismissed or stayed the petition would have been a wrongful exercise of discretion. In reality he had no alternative but to proceed to determine the matter. To do otherwise would have caused injustice to both parties”.

This conclusion, with which their Lordships are in entire agreement…’

In Botleigh Grange Hotel Limited v Her Majesty's Revenue and Customs [2018] EWCA Civ 1032, in the Court of Appeal, Asplin LJ said, at paragraph 8:

'It is now also accepted that the approach of the Companies Court in not determining the merits of genuine disputes that are based on substantial grounds is a matter of practice and not one of jurisdiction and that the court retains a discretion to do so: Brinds Ltd v Offshore Oil NL (1986) 2 BCC 98 ,916 per Lord Brightman at 98,921 and 98,922; Claybridge Shipping Co SA [1997] 1 BCLC 572 per Oliver LJ at 578h; Parmalat Capital Finance Ltd v Food Holdings Ltd (in liquidation) [2008] BCC 371 per Lord Hoffmann at [9]; and Tallington Lakes Ltd v Ancasta International Boat Sales Ltd [2014] BCC 327 per David Richards J (as he then was) at [5] and [41] with whom Patten and Thorpe LJJ agreed. There may be cases in which it is in accordance with the overriding objective to exercise the Court's discretion to determine the merits of the underlying dispute because: it is clear that all of the relevant evidence is before the court; the matter can be decided on the documents alone and that is accepted to be the case; counsel is fully prepared to argue the merits of the substantive dispute; and there is sufficient court time to do so.'

It should be noted though that this was a statement aimed at describing an issue that was no longer a subject of the appeal, as Asplin LJ said earlier, in paragraph 1:

'It is no longer argued that it was not open to the court on such an application to determine the merits of the underlying dispute in relation to the petition debt or an alleged cross claim rather than merely to decide whether the debt was the subject of a genuine and substantial dispute or was subject to a cross claim which was genuine and of substance...'

The 1st instance judgment of Andrew Simmonds QC (sitting as a deputy judge of the High Court) in Botleigh Grange Ltd v Revenue and Customs Commissioners [2016] EWHC 3081 (Ch) does not seem to be available. Only a summary is available: [2016] 11 WLUK 170

[19] Chief ICCJ Briggs in Barrowfen Properties Limited v Hambros Investments Limited, Anupam Investments Limited [2019] EWHC 2548 (Ch) said, under the heading ‘The Legal Test’, in paragraph 17:

‘The parties are agreed on the legal test to be applied, namely a requirement to demonstrate that the debt or debts are disputed on genuine and substantial grounds. The test is well established. In Coulson Sanderson & Ward (1986) 2 BCC 99, 207 the Court of Appeal explained that the Court "should not on an interlocutory motion restrain what would otherwise be the legitimate presentation of a winding-up petition by someone qualified to present it, unless the company establishes on the evidence a prima facie case for holding that the petition would constitute an abuse of process.". It will be an abuse where the presenting party has no standing as a creditor. A substantial dispute is sufficient to demonstrate, for the purpose of injunctive proceedings, that a creditor has no standing: Re a Company (no 00751 of 1992) [1992] BCLC 869 . I have been directed to Tallington Lakes Ltd v South Kesteven District Council [2012] EWCA 443 where Etherton LJ (as he was) explained (at para 22) "that the threshold for establishing that a debt is disputed on substantial grounds in the context of a winding-up petition is not a high one….and may even be reached even if, on an application for summary judgment, the defence could be regarded as "shadowy"". This is the test and the standard I shall apply.’

It is interesting to note, though only of tangential relevance, that the Court of Appeal in Global 100 Limited v Maria Laleva [2021] EWCA Civ 1835 held that, the test under CPR r.55.8(2) for whether a possession claim was genuinely disputed on grounds which appeared to be substantial (and so the defence should be allowed to be pursued further, to trial), was the same as for summary judgment. It seems that the threshold for summary judgment is useful in many areas of the law. 

[20] In Stonegate Securities Ltd v Gregory [1980] Ch 576, Buckley LJ said, at 579:

‘If the creditor petitions in respect of a debt which he claims to be presently due, and that claim is undisputed, the petition proceeds to hearing and adjudication in the normal way; but if the company in good faith and on substantial grounds disputes any liability in respect of the alleged debt, the petition will be dismissed or, if the matter is brought before a court before the petition is issued, its presentation will in normal circumstances be restrained.’

[21a] In Agform Ltd v Fine Organics Ltd [2018] EWHC 2211 (Ch), HHJ Davis-White QC (sitting as a Judge of the High Court) said, at paragraph 12:

'(1) A creditor's petition can only be presented by a creditor. Until a prospective petitioner is established as being a creditor, he is not entitled to present the petition and has no standing in the Companies Court; Mann v Goldstein [1968] 1 WLR 1091.

(2) The determination of whether or not a petitioner is a creditor of the company is not a matter to be decided in winding up proceedings. The company may challenge the petitioner's standing as a creditor by advancing in good faith a substantial dispute as to the entirety of the petition date, or at least so much as will bring the indisputable part below the statutory minimum of £750. The presentation of a winding up petition in respect of a debt which is genuinely disputed on substantial grounds is an abuse of the court's process. See, for example, Stonegate Securities v Gregory [1980] Ch 576.

(3) However, the grounds of dispute must be substantial and advanced in good faith. A creditor's mere honest belief that payment is not due is not sufficient; Re a Company (No 0010656 of 1990) [1991] BCLC 464.

(4) Nor is it enough for the company simply to allege that the debt is disputed or "merely to raise a cloud of objections." The company must properly explain the basis of the dispute and provide evidence to show that it is a substantial one. If it can be seen from the papers that there is no dispute, or no dispute as to part of the debt, then ordinarily the petitioner will be allowed to proceed; Revenue & Customs Commissioners v Rochdale Drinks Distributors [2012] 1 BCLC 748.

(5) The court will be prepared to consider the evidence in detail, even if in performing that task the court may be engaged in much the same exercise as would be required for a court facing an application for summary judgment.

(6) It has been held that the test of whether the grounds in which the debt is disputed are substantial is, "Similar to or possibly slightly higher than the threshold for obtaining permission to defend under CPR Part 24". See Re a Company [2007] EWHC 2137 (Ch) at paragraph 2. A dispute will not be substantial if it has really no rational prospect of success, in Re a Company (No 0012209 of 1991) [1992] 1 WLR 351 and 354 B.

(7) A winding up petition may also be dismissed or stayed if the company can prove that: (1) it has a cross-claim against the petitioner which is larger than the undisputed debt owed to the petitioner or falls short of it by £750 or less; re a Company [1983] 1 BCC 98901, and; (2) its cross-claim is either undisputed or is genuine and serious, the test for which is much the same as that for determining whether the grounds on which a debt is disputed are substantial; Re a company (No 002272 of 2004) [2005] EPIR 1251.

(8) Finally, where a company has previously requested time to pay a debt but subsequently suddenly asserts that the debt is disputed, its assertion of a dispute should be regarded with what has been described as "acute suspicion"; Delaine Property Limited v Quarto Publishing PLC [1990] 3 ACSR 81.'

[21b] In Synergy Agri Holdings Ltd v Agform Ltd[2020] EWHC 343 (Ch), ICCJ Jones said, at paragraph 4:

'The legal test to be applied for the purposes of an application to obtain restraint of advertisement, and indeed dismissal of a petition, is whether there is established by the company a genuine dispute based on substantial grounds. This may be by defence, set off or crossclaim. Subject to special circumstances, a cross- claim will be treated in the same way as a disputed debt defence which, if established, will give rise to the jurisdiction to stay or dismiss the petition. There is no requirement that the crossclaim must be litigated or shown to have been litigated. However, a failure to pursue a crossclaim may raise doubt over its genuineness.'

[21c]In Coilcolour Ltd v Camtrex Ltd [2015] EWHC 3203, [2016] BPIR 1129, Hildyard J said, at paragraphs 31 to 42:

'31 The court will grant an injunction to prevent presentation of a winding-up petition where it considers that the petition would be an abuse of process and/or that the petition is bound to fail (to the extent they are different): Mann v Goldstein [1968] 1 WLR 1091. See also Buckley LJ in Bryanston Finance Ltd v De Vries (No. 2) [1976] Ch 63 at p. 77:

“If it could now be said that, on the available evidence, the presentation by the defendant of such a petition as is described in the injunction would prima facie be an abuse of process, the plaintiff company might claim to have established a right to seek interlocutory relief. Otherwise I do not think it can. If it were demonstrated that such a petition would be bound to fail, it could be said that to present it, or after presentation to seek to prosecute it, would constitute an abuse: Charles Forte Investments Ltd v Amanda [1964] Ch 240 .”

32 The court will restrain a company from presenting a winding-up petition if the company disputes, on substantial grounds, the existence of the debt on which the petition is based. In such circumstances, the would-be petitioner's claim to be, and standing as, a creditor is in issue. The Companies Court has repeatedly made clear that where the standing of the petitioner, and thus its right to invoke what is a class remedy on behalf of all creditors, is in doubt, it is the court's settled practice to dismiss the petition. That practice is the consequence of both the fact that there is in such circumstances a threshold issue as to standing, and the nature of the Companies Court's procedure on such petitions, which involves no pleadings or disclosure, where no oral evidence is ordinarily permitted, and which is ill-equipped to deal with the resolution of disputes of fact.

33 The court will also restrain a company from presenting a winding-up petition in circumstances where there is a genuine and substantial cross-claim such that the petition is bound to fail and is an abuse of process: see e.g. Re Pan Interiors [2005] EWHC 3241 (Ch) at [34]–[37]. If the cross-claim amounts to a set-off, the same issue as to the standing of the would-be petitioner arises as in the case where liability is entirely denied. Even if not qualifying as a set-off, a genuine and substantial cross-claim exceeding the would-be petitioner's claim will also result in the petition being dismissed in accordance with the same settled practice, save in exceptional circumstances (as a discretionary matter). That is also because, if the cross-claim is established, the would-be petitioner will have no sufficient interest either in itself having a winding up ordered, or to invoke the class remedy which such an order represents.

34 Further, it is an abuse of process to present a winding-up petition against a company as a means of putting pressure on it to pay a debt where there is a bona fide dispute as to whether that money is owed: Re a Company (No. 0012209 of 1991) [1992] BCLC 865.

35 However, the practice that the Companies Court will not usually permit a petition to proceed if it relates to a disputed debt does not mean that the mere assertion in good faith of a dispute or cross-claim in excess of any undisputed amount will suffice to warrant the matter proceeding by way of ordinary litigation. The court must be persuaded that there is substance in the dispute and in the Company's refusal to pay: a “cloud of objections” contrived to justify factual inquiry and suggest that in all fairness cross-examination is necessary will not do.

36 As stated by Chadwick J (as he then was) in Re a Company (No. 6685 of 1996) [1997] BCC 830 at 838:

“I accept that any court, and particularly the Companies Court, should not seek to resolve issues of fact without cross-examination where there is credible affidavit evidence on each side. But I do not accept that the court is bound to hold that there is a need for a trial in circumstances in which, on a full understanding of the documents, the evidence asserted in the affidavits on one side is simply incredible.”

37 There was some disagreement between the parties before me as to the relevance of proof of the relevant company's solvency. The question has not infrequently been considered, primarily because the ground for winding up is not a company's continued indebtedness but that company's insolvency: it is the inference that may be drawn from its failure to discharge undisputed or substantially indisputable indebtedness which is the true basis of the petition.

38 Mr Ashworth on behalf of Camtrex relied especially (and repeatedly) in that regard on the Court of Appeal's decision in Re Taylor's Industrial Flooring Ltd [1990] BCC 44 , where it was emphasised that (a) “if a debt is due and an invoice is sent and the debt is not disputed, then the failure of the debtor company to pay the debt is itself evidence of inability to pay”; (b) that inference is permissible even in the case of a company which is known to be in a strong financial position (see Cornhill Insurance plc v Improvement Services Ltd [1986] 1 WLR 114 ), lest otherwise solvent companies be insulated from the process and encouraged to spin out the time for payment; and (c) to displace the inference, the reason for non-payment must be substantial: “It is not enough if a thoroughly bad reason is put forward honestly.”

39 Mr Alexander, for the Company, submitted that the court should take into account all the circumstances, including whether (a) the alleged debt was entirely undisputed, or had been the subject of a stated objection and (b) the subject company appeared otherwise to be in good financial state, if so minimising any justification for a winding up (especially since a petition is a class remedy (being a remedy brought by a creditor for the protection not of himself but, whether appreciated or not, all other creditors)). Mr Alexander particularly relied on the judgment of Hoffmann J (as he then was) in Re a Company no. 0012209 of 1991 [1992] 1 WLR 351 , in which he stated:

“I do not for a moment wish to detract from anything which was said in the Cornhill Insurance case, which indeed followed earlier authority, to the effect that a refusal to pay an indisputable debt is evidence from which the inference may be drawn that the debtor is unable to pay. It was, however, a somewhat unusual case in which it was quite clear that the company in question had no grounds at all for its refusal. Equally it seems to me that if the court comes to the conclusion that a solvent company is not putting forward any defence in good faith and is merely seeking to take for itself credit which is not allowed under the contract, then the court would not be inclined to restrain presentation of the petition. But, if, as in this case, it appears that the defence has a prospect of success and the company is solvent, then I think that the court should give the company the benefit of the doubt and not do anything which would encourage the use of the Companies Court as an alternative to the RSC Ord 14 procedure.”

40 There is a measure of policy in all this. In the Cornhill Insurance case, the court's approach was to deprecate and discourage large companies standing on their size and treating and flaunting their obvious solvency as a shield or insulation against petitions even when based on undisputed debts. So too in Taylor's Industrial Flooring , the judge had found, and the Court of Appeal proceeded on the basis, that there was no substantial ground of defence; the principal purpose of the Court of Appeal's judgments was to make clear that the fact of solvency was not itself an answer to a petition based on an undisputed or indisputable debt.

41 But the point made by Hoffmann J, which I respectfully adopt, is that a company opposing a petition on the basis that it is not insolvent and the debt asserted is disputed on grounds on which it has at least a prospect of success, is not using solvency as a shield or insulation, but as part of a composite answer as to why the Companies Court is not the appropriate forum, and is thus being abused. In such a context, the court can usually be expected to give the company the benefit of the doubt and not do anything to encourage the use of the Companies Court as an alternative to ordinary court processes, even if the case is one of sufficient strength in the perception of the petitioner that it would be proper to resort to an application for summary judgment under CPR Part 24 .

42 In short, in my judgment, although solvency is not a defence to a petition based on an undisputed claim, and the court will always consider whether any dispute has real substance such as to make the Companies Court an inappropriate forum for its resolution, the court will also wish to be satisfied that the remedy is not being invoked as a means of putting pressure on a company of which the solvency is not in real doubt, and where there is a dispute as to indebtedness. Further, in my view, the remedy is ultimately discretionary; and the more obvious it is that the remedy is being threatened or pursued as a threat or to exert inappropriate pressure, the more likely the court is to give the company the benefit of any reasonable doubt, both at the interlocutory stage of an injunction and subsequently, in determining whether its defences or cross-claims give rise to a sufficiently substantial dispute to make the Companies Court process inappropriate.'

In Colt Technology Services v SG Global Group SRL [2020] EWHC 1417 (Ch), Joanne Wicks QC, sitting as a Judge of the High Court, said both counsel before her relied upon these above paragraphs from Coilcolour. She referred expressly, at paragraphs 30 to 32, to paragraphs 31-34, and 41 to 42.

[21d] In Re LDX International Group LLP [2018] EWHC 275 (Ch) - a decision successfully appealed but not on the law: Misra Ventures Ltd v LDX International Group LLP [2019] BCC 739 - Mr David Stone, sitting as a deputy High Court Judge, said, at paragraph 22:

'It seems to me that a number of uncontroversial propositions can be drawn from these cases. Given the clarity of the language of the Court of Appeal and judges of this court, it is appropriate, where possible, for me simply and respectfully to repeat their remarks:

a. In the absence of special circumstances, it will be appropriate to issue an injunction to prevent the presentation and advertisement of a winding up order where there is a genuine and serious cross-claim in an amount exceeding the petitioner's debt. The cross-claim must be genuine and serious, or, in other words, one of substance: In re Bayoil, at page 155.

b. If there is a genuine and serious cross-claim, the company should be allowed to establish its cross-claim in ordinary civil proceedings: the Companies Court is not the right court in which to engage in a detailed examination of claim and counterclaim: Dennis Rye, at paragraph 19.

c. It is incumbent on the recipient of the statutory demand to demonstrate, with evidence, that the cross-claim is genuine and serious: Orion Media, at paragraph 31. Bare assertions will not suffice: there is a minimum evidential threshold: Re a Company, at paragraph 33.

d. But it is not practical or appropriate to conduct a long and elaborate hearing, examining in minute detail the case made on each side. A lengthy hearing is likely to result in a wasteful duplication of court time: Tallington Lakes, at paragraph 41.

e. If there is any doubt about the claim or the cross-claim, then the court should proceed cautiously. This is because a winding up order is a draconian order, which, if wrongly made, gives the company little commercial prospect of reviving itself: In re Bayoil, at page 156.

f. Petitioning creditors must take a realistic view of whether the company is likely to establish a genuine and substantial dispute: Tallington Lakes, at paragraph 41.

g. A company is not prevented from raising a cross-claim simply because it could have raised or litigated the claim earlier, or because it has delayed in bringing proceedings on the cross-claim. However, the court is entitled to take any delay into account in its assessment of whether the cross-claim is genuine and serious: Dennis Rye, at paragraph 19.'

In the Court of Appeal in Misra Ventures Ltd v LDX International Group LLP [2019] BCC 739, Sir Timothy Lloyd (with whom Newey LJ agreed) said, at paragraphs 14 to 16:

'The judge had received submissions on the relevant law which was not in doubt. He directed himself correctly that the court would restrain the presentation of a winding-up petition, even on an undisputed debt, if the debtor has a genuine serious cross-claim that exceeds the amount of the debt. He also said that an injunction application is not the occasion for a detailed analysis of the asserted cross-claim. If the determination of the cross-claim requires the resolution of substantial questions of fact or law, then it should be left to be decided in ordinary civil proceedings not on the winding-up petition or an injunction application.

It is not suggested that the judge erred in his self-directions as to the law.

...but it seems to me that it is an error of law for a judge, having identified the correct test, not to follow or apply it in the course of his reasoning in considering the material before him.'

It was on Mr David Stone' analysis of the evidence and facts, which resulted in the appeal being allowed. On the law, the Court of Appeal in Misra Ventures Ltd v LDX International Group LLP [2019] BCC 739 added little. Sir Timothy Lloyd said, at paragraph 17:

'The cases in this area are very familiar and not in dispute. I will only refer to a short passage from one case which itself refers back to another. The case is Re a Company (No.006685 of 1996) [1997] B.C.C. 830 , a decision of Chadwick J (as he then was), which refers back to a Court of Appeal decision and in particular the judgment of Oliver LJ in Re Claybridge Shipping Co SA , which had been decided in 1981 but was not reported until [1997] 1 B.C.L.C. 572 . Chadwick J at 835 cited passages from Oliver LJ in the Claybridge case from which I quote one sentence:

“On an application like this court necessarily has to take a view whether, on the evidence, there really is substance in the dispute which is raised.”

Later on the same page Chadwick J said:

“In my view those authorities and, in particular the authorities of the Court of Appeal to which I have referred, make it clear that the general rule under which this court refuses to entertain a petition founded on a disputed debt applies only where the dispute is a genuine dispute founded on substantial grounds; and does not preclude this court from determining - or entitle this court to decline to determine - the question whether or not there are substantial grounds for dispute. Indeed, in the passage from the judgment of Oliver LJ to which I have just referred, he pointed out that the court necessarily has to take the view whether on the evidence there really is substance in the dispute which is raised by the alleged debtor.”'

Returning to Mr David Stone at first instance in Re LDX International Group LLP [2018] EWHC 275 (Ch), in getting to his uncontroversial propositions, he said, from paragraphs 13 to 21, under the subheading 'The Law':

'13. It is well established that the court will restrain the presentation of a winding up petition if the debt is disputed on genuine and substantial grounds. Even if the debt itself is not disputed, the court will restrain the presentation of a winding up petition if the debtor has a genuine and serious cross-claim that exceeds the value of the debt.

14. (I note in passing that, technically, the cross-claim need only equal the debt less £750. Whilst the £750 will be material in some cases, it is not in this case, and so I say no more about it.)

15. In In re Bayoil SA [1999] 1 WLR 147, Nourse LJ, with whom Ward and Mantell LJJ agreed, said this (at page 155):

"The ability of a petitioning creditor to levy execution against the company does not entitle him to have it wound up. Moreover, an order that a company be wound up, unlike a bankruptcy order, is often a death knell. Nor can it be certain that a liquidator, even with security behind him, will prosecute the company's claims with the diligence and efficiency of its directors. These, I believe, are considerations which go to justify the practice in cross-claim cases. I emphasise that the cross-claim must be genuine and serious or, if you prefer, one of substance; that it must be one which the company has been unable to litigate; and must be in an amount exceeding the amount of the petitioner's debt."

16. I note in passing that later courts have occasionally reworded slightly Nourse LJ's requirement that the cross-claim be "genuine and serious or , if you prefer, one of substance" (emphasis added) to a requirement that the cross-claim be "genuine and serious and of substance" (emphasis added): see, for example, Laddie J in Orion Media Marketing Limited v Media Brook Limited and Anor [2002] 1 BCLC 184 at paragraph 35. I have, below, adopted the Court of Appeal's formulation.

17. In In re Bayoil, Ward LJ added this (at page 156):

"Fourthly, a winding up order is a draconian order. If wrongly made, the company has little commercial prospect of reviving itself and recovering its former position. If there is any doubt about the claim or the cross-claim, that seems to me to require that the court should proceed cautiously."

18. As [counsel for the petitioner] rightly conceded, Lord Justice Nourse's remark that the company be "unable to litigate" its claim is not a barrier to injunctive relief. In Dennis Rye Limited v Bolsover District Council [2009] EWCA Civ 372 , Mummery LJ, with whom Elias LJ agreed, said this (at paragraph 19):

"Cases familiar to practitioners in the Companies Court were cited: Re Bayoil SA [1999] 1 WLR 147 at 155 per Nourse LJ; Re a Debtor (No 87 of 1999) [2000] BPIR 589 at 592H- 594G (Rimer J in a bankruptcy case); Montgomery v Wanda Modes Ltd [2003] BPIR 457 at paragraphs 28 to 36 (Park J). The authorities are illustrations of the well established practice of the Companies Court that, if a company has a genuine and serious cross-claim, which is likely to exceed the petition debt, the court will normally exercise its discretion by dismissing the winding up petition and allowing the company the opportunity to establish its cross-claim in ordinary civil proceedings. A company is not prevented from raising a cross-claim in winding up proceedings simply because it could have raised or litigated the claim before the presentation of the petition or it has delayed in bringing proceedings on the cross-claim. The failure to litigate the crossclaim is not necessarily fatal to a genuine and serious cross-claim defeating a winding up petition. However, in deciding whether it is satisfied that the cross-claim is genuine and serious, the court is entitled to take into account all the relevant circumstances, such as the fact that a company has not even attempted to litigate the cross-claim, or that there are reasons why it has not done so."

See also Popely v Popely [2004] EWCA Civ 463 at paragraph 123 per Jonathan Parker LJ, with whom Ward LJ and Moses J agreed.

19. This court, and the Court of Appeal, have also been clear that an application for injunctive relief is not the occasion for a detailed analysis of the claimed cross-claim. For example, in Tallington Lakes Limited v Ancasta International Boat Sales Limited [2012] EWCA Civ 1712 , David Richards J, with whom Thorpe and Patten LJJ agreed, said this (at paragraph 41):

"The practical issue is the extent to which the court must go in determining whether there is a genuine dispute on substantial grounds. The court must, as Oliver LJ put it, take a view whether, on the evidence, there really is substance in the dispute. … It is not, however, practical or appropriate to conduct a long and elaborate hearing, examining in minute detail the case made on each side. Such a course will involve both delay in getting the issue ready for hearing and a potentially lengthy hearing. In this case, the evidence went through several rounds over a period of some six months. This time would have been better spent in getting a Part 7 claim underway. A lengthy hearing is likely to result in a wasteful duplication of court time. Petitioning creditors must take a realistic view of whether the company is likely to establish a genuine and substantial dispute."

20. Park J put it this way in Montgomery (at paragraph 8):

"I wish to add one other point of legal principle which is in my view clearly established by the authorities. The point is familiar in cases where the company's ground of opposition to the petition is that it disputes the debt relied on by the petitioner. In the present case WML admits the debt but says that it has a cross-claim in a greater amount. However, I believe that the principle which I am about to state is equally applicable in either context. The principle is that, if the ground of opposition by the company raises substantial questions of fact or law (or both) which are genuinely disputed by it, the petition should be dismissed: a court hearing on a winding-up petition is not the appropriate forum to determine such questions. Rather they should be litigated in the normal forum for resolving them."

21. [Counsel for the petitioner] relied on the decision in Orion Media Marketing Limited v Media Brook Limited [2002] 1 BCLC 184 in which Laddie J said (at paragraph 31) "if the recipient of a statutory demand wishes to put forward a substantial defence to the sums claimed, or a cross-claim, it is incumbent upon it to show that the defence or the cross-claim is indeed genuine, serious and of substance". Bare assertions will not suffice for an injunction, he submitted, citing Warren J in In the matter of Pan Interiors Limited [2005] EWHC 3241 (Ch). As Mr David Foxton QC sitting as a Deputy High Court Judge put it in Re a Company [2016] EWHC 3811 (Ch) at paragraph 33:

"I accept Mr Davies' submission that applications for injunctions to restrain the presentation or advertisement of a petition are brought on in haste and both this factor and the role of the Companies Court on such applications must temper the court's expectations as to the extent of the evidence which will be available. Nevertheless, as is clear from Warren J's judgment in Pan Interiors, there is some minimum evidential threshold necessary before it can be said that there is a substantial dispute."

Further, after his set of 'uncontroversial propositions', Mr David Stone, sitting as a deputy High Court Judge in Re LDX International Group LLP [2018] EWHC 275 (Ch) said, at paragraphs 23 to 27:

'23. [Counsel for the company LDX] submitted that the threshold test for a genuine and serious cross-claim was a "relatively low one" – it must be "more than merely arguable" and have some substance to it. [Counsel for the petitioner] argued in response that "more than merely arguable" is not the test, and I agree. As I have set out above, I do not consider those suggestions to be an improvement on the language of the Court of Appeal. I have therefore applied the test set out by the Court of Appeal in In re Bayoil – is the cross-claim genuine and serious or one of substance?

24. In relation to winding up petitions presented for a collateral purpose, I was directed to In Re Majory [1955] Ch 600, where Evershed MR, Jenkins and Romer LJJ said this a page 623:

"…court proceedings may not be used or threatened for the purpose of obtaining for the person so using or threatening them some collateral advantage to himself, and not for the purpose for which such proceedings are properly designed and exist; and a party so using or threatening proceedings will be liable to be held guilty of abusing the process of the court and therefore disqualified from invoking the powers of the court by proceedings he has abused.

…the court will always look strictly at the conduct of a creditor using or threatening such proceedings; and if it concludes that the creditor has used or threatened the proceedings at all oppressively, for example, in order to obtain some payment or promise from the debtor or some other collateral advantage to himself properly attributable to the use of the threat, the court will not hesitate to declare the creditor's conduct extortionate and will not allow him to make use of the process which he has abused."

25. I accept [Counsel for the company LDX's] statement of the law that a petition being sought to secure some collateral purpose, such as to stifle related proceedings, would be an abuse of process, and therefore liable to be restrained.

26. For present purposes, the parties agreed that there is no difference in the principles that apply to (i) an injunction to restrain presentation of a winding up petition, (ii) an injunction to restrain the advertisement of a winding up petition, or (iii) an injunction to restrain other publicising of a winding up petition. I have proceeded on the basis that they stand and fall together.

27. Whilst [counsel for the petitioner] made detailed submissions as to LDX's solvency, I was not taken to any authority which suggests that solvency is part of the assessment to be made as to whether or not LDX has a genuine and serious cross-claim. Again, this application is not the appropriate forum in which to test LDX's solvency. I therefore say nothing further about it.'

[21e] In JT Developments Solutions Ltd v Secretary of State for Education acting through the Education Skills Funding Agency [2021] EWHC 2943 (Ch), HHJ David Cooke (sitting as a Judge of the High Court) said, at paragraphs 1 to 6 inclusive,:

'...the applicants seek to restrain presentation of any such petition, on the ground that their liability for the amounts demanded is disputed and should be determined in ordinary proceedings under CPR Pt 7 and not by the Companies Court.

The relevant law is well known. The court may restrain presentation of a petition to wind up a company if satisfied, on application by the company, that the petition would be an abuse of process. A petition based on a debt that is genuinely disputed, on substantial grounds, by the company is an abuse of process because the standing of the petitioner as a creditor is in dispute and the Companies Court is not equipped, by virtue of the nature of the proceedings before it, to resolve that dispute. It is the settled practice of the Companies Court to dismiss such petitions if they come before it.

Mere assertion of a dispute is not however sufficient, the court must be satisfied that the dispute is genuine and based on substantial grounds. It is prepared to examine the evidence to ascertain whether grounds put forward are substantial or a “cloud of objections” without substance. If the evidence raises a dispute of fact which must be resolved in order to establish the debt, and which is such as to require cross examination of witnesses, that must be done in a conventional trial. Again however not every asserted dispute of fact is such as to require trial; the court may in an appropriate case conclude that the evidence asserted to dispute the debt is incredible or, to put it another way, has no real prospect of being accepted at trial.

While the court may be able to deal with short points of construction on hearing an application for an injunction, where difficult points arise, and particularly any that may require consideration of the factual context, that is likely to require to be dealt with in ordinary proceedings.

The onus is on the company to establish that a petition would be an abuse. The exercise performed by the court is very similar to that which would be required if the company were facing an application for summary judgment, though of course unlike a summary judgment application, the company will not have set out its defence by way of pleadings.

As examples of cases setting out these propositions, [Counsel for the Secretary of State] referred me to Coilcolor Ltd v Camtrex Ltd [2015] EWHC 3202 (Ch) at [32]-[35], Re a Company (No 006685 of 1996) [1997] 1 BCLC 639 and Angel Group Ltd v British Gas Trading Ltd [2012] EWHC 2702 (Ch), among others. [Counsel for the Applicants] do not dissent in any respect.'

[21f] In The Petitioner v The Company [2021] EWHC 3249 (Ch), ICCJ Barber said, under the subheading 'Principles to be applied', at paragraphs 80-81

The settled principles governing applications to restrain are helpfully summarised in Angel Group Ltd v British Gas Trading Ltd [2013] BCC 265 at [22] by Norris J as follows:

'The principles to be applied in the exercise of this jurisdiction are familiar and may be summarised as follows:

(a) A creditors petition can only be presented by a creditor, and until a prospective petitioner is established as a creditor he is not entitled to present the petition and has no standing in the Companies Court: Mann v Goldstein [1968] 1 WLR 1091.

(b) The company may challenge the petitioner's standing as a creditor by advancing in good faith a substantial dispute as to the entirety of the petition debt (or at least so much as will bring the indisputable parts below £750).

(c) A dispute will not be 'substantial' if it has really no rational prospect of success: In Re a Company (No.012209 of 1991) [1992] 1 WLR 351 at 354B.

(d) A dispute will not be put forward in good faith if the company is merely seeking to take for itself credit which it is not allowed under the contract: ibid at 354F.

(e) There is thus no rule of practice that the petition will be struck out merely because the company alleges that the debt is disputed. The true rule is that it is not the practice of the Companies Court to allow a winding up petition to be used for the purpose of deciding a substantial dispute raised on bona fide grounds, because the effect of presenting a winding up petition and advertising that petition is to put upon the company a pressure to pay (rather than to litigate) which is quite different in nature from the effect of an ordinary action: in Re a Company (No. 006685 of 1996) [1997] BCC 830 at 832F.

(f) But the courts will not allow this rule of practice itself to work injustice and will be alert to the risk that an unwilling debtor is raising a cloud of objections on affidavits in order to claim that a dispute exists which cannot be determined without cross-examination (ibid. at 841C).

(g) The court will therefore be prepared to consider the evidence in detail even if, in performing that task, the court may be engaged in much the same exercise as would be required of a court facing an application for summary judgement: (ibid. at 837B).'

On behalf of the petitioner, [counsel for the Petitioner] also referred me to the cases of LDX International Group LLP v Misra Ventures [2018] EWHC 275 (Ch) and Re Swan Camden Hill Ltd [2021] EWHC 2470, in support of the propositions that:

(1) It is for the company to demonstrate, with evidence, that its defence is genuine, serious and of substance. Bare assertion will not suffice.

(2) In assessing that evidence, the court should take a realistic view of whether the company is likely to establish a genuine and substantial dispute: Re Swan, para 11.

(3) It is open to the court to reject evidence because of its inherent implausibility or because it is contradicted by or not supported by documents. The mere fact that a party asserts that a thing did or did not occur, is not sufficient in itself to raise a triable issue. That evidence must inevitably be considered against the background of all the admissible evidence and material in order to judge if it is an allegation of any substance: Re Swan, para 12.

[21g] In Fenton Whelan Ltd v Swan Campden Hill Ltd [2021] EWHC 2470 (Ch), a winding up petition case, ICC Judge Burton said, under the heading 'Relevant Legal Principles', at paragraphs 7 to

'7. The legal principles are well known and have been summarised in the skeleton arguments. Whilst each emphasised what they considered to be pertinent issues by reference to separate authorities, the key principles do not appear to be in dispute. The rule of practice, long rehearsed in this court, is that the court will dismiss a petition when it is satisfied that the debt on which the petition is based is bone fide disputed on substantial grounds.

8. Even in cases where the petition debt is not disputed, as established by the Court of Appeal in Re Bayoil SA [1999] 1WLR 147, the court has a discretion and may decline to order winding up where there is a genuine and serious cross-claim that the respondent has been unable to litigate that equals or exceeds the amount of the petition debt.

9. [Counsel for the petitioner] highlights that although a failure to litigate a cross-claim is not necessarily fatal, in deciding whether a cross-claim is genuine and serious, the court is entitled to take into account all the relevant circumstances, including the fact that a company has not attempted to litigate it. In Dennis Rye Ltd v Bolsover District Council [2010] BCC 248, Mummery LJ stated:

A company is not prevented from raising a cross-claim in winding-up proceedings simply because it could have raised or litigated the claim before the presentation of the petition or it has delayed in bringing proceedings on the cross-claim. The failure to litigate the cross-claim is not necessarily fatal to a genuine and serious cross-claim defeating a winding-up petition. However, in deciding whether it is satisfied that the cross-claim is genuine and serious, the court is entitled to take into account all the relevant circumstances, such as the fact that a company has not even attempted to litigate the cross-claim, or that there are reasons why it has not done so.

10. [Counsel for the company] referred me to LDX International Group LLP v Misra Ventures Ltd [2018] EWHC 275 Ch in which David Stone, sitting as a Deputy High Court Judge brought together the key uncontroversial propositions that can be drawn from the leading authorities concerning a company's opposition to the making of a winding-up order. [Counsel for the company] relied upon the summary as authority for two principal propositions. First, when considering whether to make a winding-up order in the face of opposition, it is not practical or appropriate for the court to conduct a long and elaborate hearing, examining in minute detail, the case made on each side. In Re Bayoil, cited in LDX International Group LLP, Ward LJ said:

a winding-up order is a draconian order. If wrongly made, the company has little commercial prospect of reviving itself and recovering its former position. If there is any doubt about the claim or the cross-claim, that seems to me to require that the court should proceed cautiously.

11. Secondly, [Counsel for the company] submitted that the court must take a realistic view of whether the Company is likely to establish a genuine and substantial dispute and/or cross claim. I accept his submission, noting also the third proposition set out in LDX, that:

It is incumbent on the recipient of the statutory demand to demonstrate, with evidence, that the cross-claim is genuine and serious: Orion Media, at paragraph 31. Bare assertions will not suffice: there is a minimum evidential threshold: Re a Company, at paragraph 33.

12. [Counsel for the petitioner] relies upon the Court of Appeal's judgment in Ashworth v Newnote Ltd [2007] BPIR 1012 as authority for the proposition that when considering a party's opposition to a winding-up petition, it is open to the court to reject evidence because of its inherent implausibility or because it is contradicted by or not supported by the documents. In reaching its conclusion, the Court relied upon paragraph 12 of Patten J's judgment in Portsmouth v Alldays Franchising Ltd and others [2005] EWHC 1006 (Ch):

[12] So far as the evidence is concerned the mere fact that a party in proceedings not involving oral evidence or crossexamination asserts that certain things did or did not occur, is not sufficient in itself to raise a triable issue. That evidence inevitably has to be considered against the background of all the other admissible evidence and material in order to judge whether it is an allegation of any substance. Once the court considers that the evidence is reliable in that sense, and not some attempt to obfuscate the real issues by raising a series of hopeless allegations then it does, of course, become necessary to consider what the legal consequences of it are.

13. In her skeleton argument and oral submissions, [Counsel for the petitioner] referred to the Company's decision, as time advanced, to raise points in opposition to the petition which were initially not mooted in any of the correspondence which preceded service of the statutory demand, nor in the first witness statement of the Company's solicitor, Andrew James Head dated 23 October 2020,

14. in opposition of the petition. She submitted that this gave rise to the archetypal case in which a company seeks to raise a cloud of objections to stave off a winding-up petition. I take this to be a reference to the observations of Oliver LJ in Re Claybridge Shipping Company SA, regarding an unwilling debtor raising in his affidavit, a cloud of objections in order to claim that a dispute of fact exists which cannot be determined without cross-examination so that the petition cannot be allowed to proceed. As noted by Chadwick J in Re a Company No. 006685 of 1996 [1997] B.C.C. 830, referring in turn to Staughton LJ in Re Taylor's Industrial Flooring Ltd anything that the law could do to discourage such behaviour should be done'

[21h] In Re Swindon Town Football Co Ltd [2022] EWHC 2071 (Ch), Deputy ICC Judge Baister said, at paragraphs 26-32:

'26. The starting point is that a petitioner with an undisputed debt is generally entitled to a winding up order as a matter of right: Maud v Aaber Block Sarl [2015] BPIR 819 has been cited, but the proposition is well established in earlier authority. The converse is that it is not entitled to a winding up order where the petition debt is disputed on substantial grounds. [Counsel for the Company] sets out Norris J's exposition of the relevant considerations in Angel Group Ltd v British Gas Trading Ltd [2012] BCC 265 at paragraph 22.

27. As [Counsel for the Petitioner] points out, the test as to whether a debt is disputed on substantial grounds is the same as that applicable to summary judgment, namely whether there is a real prospect of success: Bryce Ashworth v Newnote Ltd [2007] BPIR 1012, paragraphs 31-33. That means a realistic as opposed to a fanciful prospect, carrying some degree of conviction and not merely arguable: Swain v Hillman [2001] 1 All ER 91; ED & F Man Liquid Products Ltd v Patel [2003] EWCA Civ 472; or, as Norris J put it in Angel v British Gas (drawing on Re A Company (No 012209 of 1991) [1992] 1 WLR 351), "A dispute will not be 'substantial' if it has really no rational prospect of success;" and, "A dispute will not be put forward in good faith if the company is merely seeking for itself credit which it is not allowed…".

28. Bare assertions will not suffice: Re Swan Campden Hill Ltd [2021] EWHC 2470 (Ch), but again there is much authority to the same effect.

29. It is open to the court to reject evidence because of its inherent implausibility or because it is contradicted by or not supported by the documents: National Westminster Bank plc v Daniel [1993] 1 WLR 1453; Portsmouth v Alldays Franchising Ltd [2005] BPIR 1394.

30. The court must be alive to and ready to dismiss "a smokescreen of unfounded assertion" raised to avoid summary judgment or insolvency. [Counsel for the Petitioner] relies on a colourful observation of Megarry V-C in Lady Anne Tennant v Associated Newspaper Group Ltd [1979] FSR 298 :

"A desire to investigate alleged obscurities and a hope that something will turn up on the investigation cannot, separately or together, amount to sufficient reason for refusing to enter judgment for the plaintiff. You do not get leave to defend by putting forward a case that is all surmise and Micawberism."

As [Counsel for the Petitioner] referred in passing to the better known "cloud of objections" formulation adopted by Chadwick J in Re a Company (No 006685 of 1996) [1997] 1 BCLC 639; [1997] BCC 830, I should mention that too. (It was used by Norris J in the Angel case as well.)

31. Raising a bona fide dispute is to be distinguished from "going fishing." [Counsel for the Petitioner] points out that:

"[O]ne does not set aside a statutory demand merely because a party wishes to put the opponent to the trouble of further litigation" (Williamson v Governor of the Bank of Scotland [2006] BPIR 1085).

The same point must apply equally to the hearing of a winding up petition.

32. [Counsel for the Company] submits the court should not conduct a long and elaborate hearing, examining in minute detail the cases made on each side. He cites Re Swan Campden Hill Ltd (supra) again and LDX International Group LLP v Misra Ventures Ltd [2018] EWHC 274 (Ch) in support of that. I note, however, Norris J's dictum :

"The court will therefore be prepared to consider the evidence in detail even if, in performing that task, the court may be engaged in much the same exercise as would be required of a court facing an application for summary judgment."

There is, of course, not necessarily a tension between the two propositions.'

[21i] ICC Judge Barber in Re Glocin Ltd Glocin Ltd v Bancibo SE [2022] EWHC 1858 (Ch) said, at paragraph 29, under the heading of '[Company's] Application: legal principles':

'It was common ground that the test on this application is whether the petition debt is genuinely disputed on substantial grounds: Re a Company [2013] EWHC 4291 (Ch). As explained by Hildyard J in Coilcolour Ltd v Camtrex Ltd [2015] EWHC 3202 (Ch) at [32], [34] and [35] (a case on restraining presentation, but equally applicable on present facts):

'[32] The court will restrain a company from presenting a winding up petition if the company disputes, on substantial grounds, the existence of the debt on which the petition is based. In such circumstances, the would-be petitioner's claim to be, and standing as, a creditor is in issue. The Companies Court has repeatedly made clear that where the standing of the petitioner, and thus its right to invoke what is a class remedy on behalf of all creditors, is in doubt, it is the court's settled practice to dismiss the petition. That practice is the consequence of both the fact that there is in such circumstances a threshold issue as to standing, and the nature of the Companies Court's procedure on such petitions, which involves no pleadings or disclosure, where no oral evidence is ordinarily permitted, and which is ill equipped to deal with the resolution of disputes of fact.

...

[34]     Further, it is an abuse of process to present a winding up petition against a company as a means of putting pressure on it to pay a debt where there is a bona fide dispute as to whether that money is owed: Re a Company (No 0012209 of 1991) [1992] BCLC 865.

[35]     However, the practice that the Companies Court will not usually permit a petition to proceed if it relates to a disputed debt does not mean that the mere assertion in good faith of a dispute or cross-claim in excess of any undisputed amount will suffice to warrant the matter proceeding by way of ordinary litigation. The court must be persuaded that there is substance in the dispute and in the company's refusal to pay: a 'cloud of objections' contrived to justify factual enquiry and suggest that in all fairness cross examination is necessary will not do.'

[21j] In Town and Country Properties (GB) Ltd v Patel [2023] EWHC 1168, Asplin LJ (in the High Court) heard an appeal from decisions of Deputy ICC Judge Agnello KC, in relation to: (1) a winding up petition against an unregistered company/partnership (Black Capital); (2) bankruptcy petitions against a Mr Ubhi, and Mr Patel; (3) the setting aside of a statutory demand.

In respect to Mr Ubhi and whether to set aside the statutory demand served on Mr Ubhi, the issue had arisen at first instance 'whether there was a dispute on substantial grounds as to whether Mr Ubhi was a partner in Black Capital' (paragraph 10). In her judgment, ICC Judge Agnello KC had set out the law on this area, which at the appeal, counsel for the appellant (Town and Country Properties (GB) Ltd) accepted was a correct direction as to the test to be applied (paragraphs 13 + 23). Consequently, it pays therefore to set out ICC Judge Agnello KC's summary of the law, as summarised by Asplin LJ in her judgment on the appeal. Asplin LJ said, at paragraph 10 that ICCJ Agnello KC had decided that '...the test which she had to apply...was a real prospect of success as to whether there was a dispute on substantial grounds [8] and [9]' (paragraph 10). Further, at paragraphs 10 to 12, that:

'In this regard, she quoted a passage from the judgment of Arden LJ in Collier v P & MJ Wright (Holdings) Ltd [2007] EWCA Civ 1329 at [21] confirming the test and commenting upon its application as follows:

“. . . In my judgment, the requirements of substantiality or (if different) genuineness would not be met simply by showing that the dispute is arguable. There has to be something to suggest that the assertion is sustainable. The best evidence would be incontrovertible evidence to support the applicant's case, but this is rarely available. It would in general be enough if there were some evidence to support the applicant's version of the facts, such as a witness statement or a document, although it would be open to the court to reject that evidence if it were inherently implausible or if it were contradicted, or were not supported, by contemporaneous documentation: see also per Lawrence Collins LJ in the Ashworth case, para 34. But a mere assertion by the applicant that something had been said or happened would not generally be enough if those words or events were in dispute and material to the issue between the parties. There is in the result no material difference on disputed factual issues between real prospect of success and genuine triable issue.”

The judge went on to note that it was not for her to conduct a mini trial and that where there are bare assertions in a witness statement which were contradicted by contemporaneous documents, it was open to the court to determine that the statements were inherently implausible but that such a determination is reserved for clear cases [10]. In that regard, she quoted a passage in Lord Hamblen’s judgment in the Supreme Court in HRH Emere Godwin Bebe Okpabi v Royal Dutch Shell Plc [2021] 1 WLR 1294 at [110] in which he had addressed the circumstances in which factual assertions might be rejected, as follows:

“110 In his judgment at para 190 the Chancellor rejected the complaint that Fraser J had conducted a mini-trial and considered that he was doing no more than subjecting the evidence to critical analysis. He cited para 10 of Potter LJ’s judgment in ED & F Man Liquid Products Ltd v Patel [2003] CP Rep 51 in which it was observed that factual assertions do not have to be accepted by the court if it is “clear” that there is “no real substance” in them, “particularly if contradicted by contemporary documents” - ie if they are demonstrably unsupportable. That is only going to be so in clear cases. As Carnwath LJ observed in Mentmore International Ltd v Abbey Healthcare (Festival) Ltd [2010] EWCA Civ 761 at [23], referring to both Potter LJ’s judgment in the ED & F Man case and Lord Hope’s judgment in the Three Rivers case [2003] 2 AC 1: ”

“If Mr Reza was hoping to find in those words some qualification of Lord Hope’s approach, he will be disappointed. The Three Rivers case was specifically cited by Potter LJ. He was in my view intending no more than a summary of the same principles. Lord Hope had spoken of a statement contradicted by “all the documents or other material on which it is based” (emphasis added). It was only in such a clear case that he was envisaging the possibility of rejecting factual assertions in the witness statements. It is in my view important not to equate what may be very powerful cross-examination ammunition, with the kind of “knock-out blow” which Lord Hope seems to have had in mind.””

Having considered the nature of the Opkapi case and its relevance in relation to the application of the summary judgment test, at [13] the judge held as follows:

“. . . It is only in clear cases that a court may determine that a particular defence etc is inherently implausible. Contemporaneous documentation which supports a particular defence in a case where there are contemporaneous documents which contradict that defence is an example of a case where a Judge would not necessarily be facing one of those clear cases. There may well be cases where the contemporaneous documentation relied on which contradict other documentation are clearly capable of being rejected, but this is not the time to speculate on those types of cases. In my judgment, the test to be applied remains as set out by Lady Justice Arden and is one which is well understood. The Supreme Court cases provides a useful reminder of these well known principles and also that courts must not fall into the mini trial trap and must ensure that an evaluation, or critical analysis by the court of the evidence before it does not lead to findings as occurred in Okpabi at first instance and also in the Court of Appeal.”'

Under the heading 'Legal Principles', Asplin LJ then added her summary of the relevant principles (starting with the rule for setting aside personal insolvency statutory demands, but then considering the similar situation for winding up petitions). Asplin LJ said, at paragraphs 23 to 24:

'Rule 10.5 (5)(b) of the Insolvency (England and Wales) Rules 2016 provides that the court may grant the application if “the debt is disputed on grounds which appear to the court to be substantial”. Similarly, a winding-up petition will not be made on the basis of a debt which is genuinely disputed on substantial grounds: Re a Company No. 006685 of 1996 [1997] BCC 830. Any dispute raised under rule 10.5(5)(b) must have a real prospect of success: Re Kerkar [2021] EWHC 3255 at [8] citing Ashworth v Newnote Ltd [2007] EWCA Civ 793.

It is also well known that for the purposes of the summary judgment test, the court considers whether the claim has a “realistic” as opposed to a “fanciful” prospect of success and that a realistic claim must carry some degree of conviction: ED&F Man Liquid Products Ltd v Patel [2003] EWCA Civ 472 at [7] and [8]. Further, the court is not required to take at face value everything which a party states in his witness statement: Re Kerker at [34] and ED&F Man Liquid Products Ltd v Patel in which Potter LJ stated at [10] as follows:

“10. It is certainly the case that under both rules, where there are significant differences between the parties so far as factual issues are concerned, the court is in no position to conduct a mini−trial: see per Lord Woolf MR in Swain v Hillman [2001] 1 All ER 91 at 95 in relation to CPR 24. However, that does not mean that the court has to accept without analysis everything said by a party in his statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporary documents. If so, issues which are dependent upon those factual assertions may be susceptible of disposal at an early stage so as to save the cost and delay of trying an issue the outcome of which is inevitable: see the note at 24.2.3 in Civil Procedure (Autumn 2002) Vol 1 p.467 and Three Rivers DC v Bank of England (No.3) [2001] UKHL 16, [2001] 2 All ER 513 per Lord Hope of Craighead at paragraph [95].”

Furthermore, the court may find assertions in a witness statement unreliable without the benefit of cross-examination and reject them: CFL Finance Ltd v Bass [2019] EWHC 1839. All of this is clear from the passages which the judge quoted from the Collier and Okpabi cases which I have already set out.'

[21k] In Re Property Services LDN Ltd [2023] EWHC 1778 (Ch), ICC Judge Greenwood was hearing a winding up petition, and said, at paragraphs 27 to 31:

'27. As to the relevant legal principles in respect of winding up petitions, there was no dispute:

27.1. first, that a winding-up order will not be made on the basis of a debt that is genuinely disputed on substantial grounds. As was said by Hildyard J in Colicolour Ltd v Camtrex Ltd [2015] EWHC 3202 (Ch), at [32]: “The Companies Court has repeatedly made clear that where the standing of the petitioner, and thus its right to invoke what is a class remedy on behalf of all creditors, is in doubt, it is the Court's settled practice to dismiss the petition.”

27.2. second, that if to the same end, the debtor company asserts a cross-claim, it must be “genuine and serious …. one of substance”: Re Bayoil SA [1999] 1 WLR 147 , per Nourse J.

28. The principles were summarised by Norris J in Angel Group v. British Gas [2012] EWHC 2702 (in a passage which was not cited, but is not controversial) at [22]:

"The principles to be applied…. are familiar and may be summarised as follows:-

a) A creditor's petition can only be presented by a creditor, and until a prospective petitioner is established as a creditor he is not entitled to present the petition and has no standing in the Companies Court: Mann v Goldstein [1968] 1WLR 1091;

b) The company may challenge the petitioner's standing as a creditor by advancing in good faith a substantial dispute as to the entirety of the petition debt (or at least so much as will bring the indisputable part below £750);

c) A dispute will not be "substantial" if it has really no rational prospect of success: in Re A Company No.0012209 [1992] 1WLR 351 at 354B.

d) A dispute will not be put forward in good faith if the company is merely seeking to take for itself credit which it is not allowed under the contract: ibid. at 354F.

e) There is thus no rule of practice that the petition will be struck out merely because the company alleges that the debt is disputed. The true rule is that it is not the practice of the Companies Court to allow a winding up petition to be used for the purpose of deciding a substantial dispute raised on bona fide grounds, because the effect of presenting a winding up petition and advertising that petition is to put upon the company a pressure to pay (rather than to litigate) which is quite different in nature from the effect of an ordinary action: in Re A Company No.006685 [1997] BCC 830 at 832F.

f) But the court will not allow this rule of practice itself to work injustice and will be alert to the risk that an unwilling debtor is raising a cloud of objections on affidavit in order to claim that a dispute exists which cannot be determined without crossexamination (ibid. at 841C).

g) The court will therefore be prepared to consider the evidence in detail even if, in performing that task, the court may be engaged in much the same exercise as would be required of a court facing an application for summary judgment: (ibid at 837B).”

29. Similarly, in LDX International Group LLP v Misra Ventures Limited [2018] EWHC 275 (Ch) David Stone (sitting as a Deputy HCJ) stated at [22]: “It seems to me that a number of uncontroversial propositions can be drawn from these cases. Given the clarity of the language of the Court of Appeal and judges of this court, it is appropriate, where possible, for me simply and respectfully to repeat their remarks:… a. In the absence of special circumstances, it will be appropriate to issue an injunction to prevent the presentation and advertisement of a winding up order where there is a genuine and serious crossclaim in an amount exceeding the petitioner's debt. The cross-claim must be genuine and serious, or, in other words, one of substance…. c. It is incumbent on the recipient of the statutory demand to demonstrate, with evidence, that the cross-claim is genuine and serious: Orion Media , at paragraph 31. Bare assertions will not suffice: there is a minimum evidential threshold: Re a Company , at paragraph 33”.

30. Finally, in Winnington Networks Communications Ltd v HM Revenue & Customs [2015] B.C.C. 554 , Nicholas le Poidevin QC (sitting as a Deputy HCJ) at [11] quoted Rimer LJ in Revenue and Customs Commissioners v Rochdale Drinks Distributors Ltd [2011] EWCA Civ 1116 : “It perhaps hardly needs to be said that the rule does not, however, entitle a company to do no more than assert that it disputes the debt and then expect the petition to be struck out or, if the hearing is the substantive one, dismissed. It is not sufficient for the company merely to raise a cloud of objections. It has, in the old-fashioned phrase, to condescend to particulars by properly explaining the basis of the claimed dispute and showing that it is a substantial one. If, despite the company’s protestations, the alleged dispute can be seen on the papers to be no dispute at all, or to be no dispute as to part of the debt, the petition will ordinarily be allowed to proceed”.

31. Again, I should record that neither of the passages set out in the two preceding paragraphs were cited to me, but again, their content is uncontroversial.'

[21l] In A Company v The Respondent [2023] EWHC 1779 (Ch) ('Company 1779'), before ICC Judge Barber, a company/applicant successfully applied for an injunction to retain a would-be petitioner from presenting a creditors winding up petition. The would-be petitioner (an employment business; not a subcontractor - paragraph 69) had served a statutory demand founded upon alleged debt based on unpaid invoices (for hours worked on two projects by electrician operatives supplied by the would-be petitioner). Subsequently, the would-be petitioner conceded that all of the statutory demand debt but c.£16K, was genuinely disputed on substantial grounds. The company/applicant (builder) alleged it had a cross claim for defective work done by the electrician operatives, of about £186K. The issue was therefore whether the would-be petitioner held the position/status of net creditor of the company/applicant (for at least £750), to the required level of substantiality (requisite degree of certainty).

Under the heading 'Legal Principles', ICC Judge Barber in Company 1779 said, at paragraphs 38 to 44:

'38. The legal principles applicable to the application were largely uncontroversial.

39. Both parties referred me to Coilcolour v Camtrex [2015] EWHC 3202, in which Hildyard J summarised the relevant principles as follows:

'31. The court will grant an injunction to restrain presentation of a winding up petition where it considers that the petition would be an abuse of process and/or that the petition is bound to fail (to the extent they are different): Mann v Goldstein [1968] 1 WLR 1091. See also Buckley LJ in Bryanston Finance Ltd v De Vries (No. 2) [1976] Ch 63 at p.77:

"If it could now be said that, on the available evidence, the presentation by the defendant of such a petition as is described in the injunction would prima facie be an abuse of process, the plaintiff company might claim to have established a right to seek interlocutory relief. Otherwise I do not think it can. If it were demonstrated that such a petition would be bound to fail, it could be said that to present it, or after presentation to seek to prosecuted, would constitute an abuse: Charles Forte Investments Ltd v Amanda [1964] Ch 240."

32. The court will restrain a company from presenting a winding up petition if the company disputes, on substantial grounds, the existence of the debts on which the petition is based. In such circumstances, the would-be petitioner's claim to be, and standing as, a creditor is in issue. The Companies Court has repeatedly made clear that where the standing of the petitioner, and thus its right to invoke what is a class remedy on behalf of all creditors, is in doubt, it is the court's settled practice to dismiss the petition. That practice is the consequence of both the fact that there is in such circumstances a threshold issue as to standing, and the nature of the Companies Court's procedure on such petitions, which involves no pleadings or disclosure, where no oral evidence is ordinarily permitted, and which is ill-equipped to deal with the resolution of disputes of fact.

33. The court will also restrain a company from presenting a winding up petition in circumstances where there is a genuine and substantial cross-claim such that the petition is bound to fail and is an abuse of process: see e.g. Re Pan Interiors [2005] EWHC 3241 (Ch) at [34]-[37]. If the cross-claim amounts to a set-off, the same issue as to the standing of the would-be petitioner arises as in the case where liability is entirely denied. Even if not qualifying as a set off, a genuine and substantial cross-claim exceeding the would-be petitioner's claim will also result in the petition being dismissed in accordance with the same settled practice, save in exceptional circumstances (as a discretionary matter). That is also because, if the cross-claim is established, the would-be petitioner will have no sufficient interest either in itself having a winding up ordered, or to invoke the class remedy which such an order represents.

34. Further, it is an abuse of process to present a winding up petition against a company as a means of putting pressure on it to pay a debt where there is a bona fide dispute as to whether that money is owed: Re a Company (No 0012209 of 1991) [1992] BCLC 865.

35. However, the practice that the Companies Court will not usually permit a petition to proceed if it relates to a disputed debt does not mean that the mere assertion in good faith of a dispute or crossclaim in excess of any undisputed amount will suffice to warrant the matter proceeding by way of ordinary litigation. The court must be persuaded that there is substance in the dispute and in the Company's refusal to pay: a "cloud of objections" contrived to justify factual enquiry and suggest that in all fairness cross examination is necessary will not do.

36. As stated by Chadwick J (as he then was) in Re a Company (No 6685 of 1996) [1997] BCC 830 at 838:

"I accept that any court, and particularly the Companies Court, should not seek to resolve issues of fact without cross-examination where there is credible affidavit evidence on each side. But I do not accept that the court is bound to hold that there is a need for a trial in circumstances in which, on a full understanding of the documents, the evidence asserted in the affidavits on one side is simply incredible."'

40. [Counsel for the company/applicant] referred me to Tallington Lakes v South Kesteven District Council [2012] EWCA Civ 443, in which Etherton LJ (albeit on an obiter basis) considered the threshold that an applicant must cross in an application to restrain presentation. At paragraph 22 of his judgment, he observed as follows:

'it is well established that the threshold for establishing that a debt is disputed on substantial grounds in the context of a winding up petition is not a high one for restraining the presentation of the winding up petition, and may be reached even if, on an application for summary judgment, the defence could be regarded as "shadowy"'.

41. [Counsel for the company/applicant] also referred me to the cases of Mulalley v Regent Building Services [2017] EWHC 2962 (at [44]) and Integral Law v Jason [2020] EWHC 3698 at [14], which take a similar approach.

42. [Counsel for the would-be petitioner] took me to the case of Ashworth v Newnote [2007] EWCA Civ 793 at [29-34] in which Lawrence Collins LJ held (in the context of an application to set aside a statutory demand) that:

(1) the test to be applied equates to the "real prospects of success" test applied in summary judgment applications;

(2) a "genuinely triable issue" means a realistic as opposed to fanciful prospect of success, carrying some degree of conviction (and not merely arguable);

(3) in each case it is open to the court to reject evidence because of its inherent implausibility or because it is contradicted by or not supported by the documents.

43. In LDX International Group LLP v Misra Ventures Ltd [2018] EWHC 275 (Ch) David Stone (sitting as a Judge of the High Court) set out certain propositions which could be drawn from the authorities, including (at 22(c)) that:

'It is incumbent on the recipient of the statutory demand to demonstrate, with evidence, that the cross-claim is genuine and serious … Bare assertions will not suffice: there is a minimum evidential threshold: Re a Company, at paragraph 33'

44. [Counsel for the would-be petitioner] also referred me to Poperly v Poperly [2004] EWCA Civ 463 at [66] per Jonathan Parker LJ (citing Re Bayoil [1999] 1 WLR 147 ) in support of the proposition that:

'Delay in putting forward a cross-claim may lead to an inference that it is not put forward in good faith, but only as a pretext in order to stave off bankruptcy.'

Later, ICC Judge Barber asked herself about the quality of certain evidence, commenting '[X's] written testimony is not manifestly incredible or inherently implausible; far from it. Nor is it contradicted by any documents in evidence.' (paragraph 82)

On the facts, ICC Judge Barber said in Company 1779:

(1) 'In my judgment, it would not be legitimate to infer from the timing of the introduction of evidence on the cross claim in this case that the cross-claim was put forward in bad faith, as a pretext to stave off winding up proceedings.' (paragraph 65);

(2) 'In my judgment, the facts and matters now relied upon by the [company/applicant] in support of its cross-claim do clear the minimum evidential threshold. The Applicant has demonstrated on the evidence before this court a genuine, strongly arguable crossclaim in contract/misrepresentation which comfortably exceeds [£16K] and has real prospects of success.' (paragraph 72)

[21m] In Time GB Group Ltd v Yarwell Mill Country Park Ltd [2023] EWHC 1887 (Ch), ICC Judge Barber said, under the heading 'Legal Principles', at paragraphs 15 to 19:

'15. The legal principles applicable to the application were largely uncontroversial.

16. [Counsel for the petitioner/respondent] referred me to the useful summary of the circumstances in which the Companies Court will restrain the presentation of a winding up petition, as set out at [31-35] of Coilcolour v Camtrex [2015] EWHC 3202, in which Hildyard J confirmed:

(1) The court will prevent presentation of a winding up petition where it considers that the petition would be an abuse of process and/or that the petition is bound to fail (to the extent that they are different).

(2) The Court will restrain a company from presenting a winding up petition where the company disputes, on substantial grounds, the existence of the debt on which the petition is based.

(3) The Court will restrain a company from presenting a winding up petition where there is a genuine and substantial cross-claim which equals or exceeds the petition debt.

(4) It is an abuse of process to present a winding up petition against a company as a means of putting pressure on it to pay a debt where there is a bona fide dispute on substantial grounds as to whether that money is owed.

(5) The practice that the Companies Court will not usually permit a petition to proceed if it relates to a disputed debt does not mean that the mere assertion in good faith of a dispute or cross-claim in excess of any undisputed amounts will suffice. As put by Hildyard J at [35]:

'The court must be persuaded that there is substance in the dispute and in the Company's refusal to pay: a cloud of objections contrived to justify factual enquiry and suggest that in all fairness cross examination is necessary will not do'.

17. [Counsel for the company/applicant] referred me to Tallington Lakes v South Kesteven District Council [2012] EWCA Civ 443, in which Etherton LJ (albeit on an obiter basis) considered the threshold that an applicant must cross in an application to restrain presentation. At paragraph 22 of his judgment, he observed as follows:

'it is well established that the threshold for establishing that a debt is disputed on substantial grounds in the context of a winding up petition is not a high one for restraining the presentation of the winding up petition, and may be reached even if, on an application for summary judgment, the defence could be regarded as shadowy'.

18. [Counsel for the petitioner/respondent] referred me to Tallington Lakes Ltd v Ancasta International Boat Sales Ltd [2014] BCC 327, in which David Richards LJ approved the well-known passage in the judgment of Chadwick J in re a Company (No 00685 of 1996) [1997] BCC 830 at [835]:

'the general rule under which this court refuses to entertain a petition founded on a disputed debt applies only where the dispute is a genuine dispute founded on substantial grounds; and does not preclude this court from determining - or entitle this court to decline to determine - the question of whether or not there are substantial grounds for dispute. Indeed, in the passage from the judgment of Oliver LJ to which I have just referred, he pointed out that the court necessarily has to take a view whether on the evidence there really is substance in the dispute which is raised by the alleged debtor'.

19. [Counsel for the petitioner/respondent] also took me to James Dolman & Co v Pedley [2004] BCC 504, in which Arden LJ at [10] confirmed that the jurisdiction to restrain advertisement is to be exercised to prevent a threatened abuse of process of the court and that, in the absence of evidence of a threatened abuse of process, it was 'erroneous in principle' to restrain advertisement. This dovetailed neatly with a further authority relied upon by [Counsel for the petitioner/respondent], that of In Re a Company (No 007923 of 1994), in which Nourse LJ (at 958D-H) stressed the dual purposes of advertisement, these being (1) to give notice of the petition to those who are entitled to be heard on it and (2) to give notice to those who might trade with the company during the period between the presentation of petition and its final determination and who might thus be adversely affected by the provisions of section 127 IA 1986.'

[22a] In the author's view, the creditors' winding up process should be split into 2 stages:

(1) Stage 1 - establishing the eligibility of the petitioner to petition - this be done without any advertisement/notice at all - with adequate time provided to the company to prepare

Only if the petitioner is found by  the court to be eligible to so petition, does the petition move onto stage 2,

(2) Stage 2 - the petitioner to advertise (give notice of) the petition, with the court then determining whether, balancing the petitioner's right to a winding up order, against the voices of the supporting and opposing creditors, the court ought to exercise its discretion, and make the winding up order.

The voices of parties, other than the company and the petitioner, only come in at this second stage, so there is no need to advertise (give notice) prior to this second stage.

In summary: it should be for the petitioner to establish eligibility, before the court, as part of the petition process, prior to any suggestion of advertisement (notice). The process should not place the burden of seeking judicial determination on the petitioner's eligibility, upon the company, through an application for injunctive relief, especially with such a limited window of time to make the relevant application, before the petitioner is permitted to advertise, and so can cause irreparable damage. The current legal framework places an undue burden upon the company, to act quickly and bring the matter before the court. In the author's view, this is unfair to the company.

The above proposal was/is, loosely (due to one significant difference), the legal position for petitions subject Schedule 10 to the Corporate Insolvency and Governance Act 2020, prior to 1 October 2020. For those petitions, advertisment/notice of the petition was prohibited, until an issue had been judicially determined (in a particular direction) - the same as the author's proposal above. Where the situation was/is different, was that the preliminary issue to be determined was not the petitioner's eligibility (rather, it was whether the court was likely to be able to make an order under section 122(1)(f) or 221(5)(b) of the 1986 Act having regard to the coronavirus test), but it is the order/sequence of legal stages, that is being focused on for present purposes.

[22b] In Cadiz Waterworks Co. v Barnett (1874) LR 19 Eq 182, Malins VC commented:

'…if [this court] sees a petition to wind up presented, not for a bona fide purpose of winding up the company, but for some collateral and sinister object, on that ground it will be dismissed with costs … the object of this court is to restrain the assertion of doubtful rights in a manner productive of irreparable damage.'

[23] This passage was quoted with apparent approval by Chadwick J in Re a Company No.006685 of 1996, at 833-834. 

Section 227 of the Companies Act 1948 (now obsolete) was entitled 'Avoidance of dispositions of property, &c. after commencement of winding up' and read (when originally enacted):

'In a winding up by the court, any disposition of the property of the company, including things in action, and any transfer of shares, or alteration in the status of the members of the company, made after the commencement of the winding up, shall, unless the court otherwise orders, be void.

[24] In Mann, Ungoed-Thomas J said, as regards to the jurisdictional basis for the Companies Court’s power to grant a prohibitory injunctions, at 1098-1099: 

‘For my part, I would prefer to rest the jurisdiction directly on the comparatively simple propositions that a creditor's petition can only be presented by a creditor, that the winding-up jurisdiction is not for the purpose of deciding a disputed debt (that is, disputed on substantial and not insubstantial grounds), since, until a creditor is established as a creditor he is not entitled to present the petition and has no locus standi in the Companies Court; and that, therefore, to invoke the winding-up jurisdiction when the debt is disputed (that is, on substantial grounds) or after it has become clear that it is so disputed is an abuse of the process of the court.’

In Stonegate, Buckley LJ said at 579 ‘…a winding up petition is not a legitimate means of seeking to enforce payment of a debt which is bona fide disputed.’ And then adopted at 580 the passage from Mann above [1098-1099].

In Coilcolour, Hildyard J said, at paragraph 32:

‘The court will restrain a company from presenting a winding-up petition if the company disputes, on substantial grounds, the existence of the debt on which the petition is based. In such circumstances, the would-be petitioner's claim to be, and standing as, a creditor is in issue. The Companies Court has repeatedly made clear that where the standing of the petitioner, and thus its right to invoke what is a class remedy on behalf of all creditors, is in doubt, it is the court’s settled practice to dismiss the petition. That practice is the consequence of both the fact that there is in such circumstances a threshold issue as to standing, and the nature of the Companies Court's procedure on such petitions, which involves no pleadings or disclosure, where no oral evidence is ordinarily permitted, and which is ill-equipped to deal with the resolution of disputes of fact.' [perhaps read 'a petitioner' for 'a company' in the first sentence]

[25]Two points on this quote from the Deputy Judge in Foxholes Nursing Home Limited v Accora Limited [2013] EWHC 3712:

(i) In Re a Company (No. 6685 of 1996) [1997] BCC 830, Chadwick J said, at 838D:

'I accept that any court, and particularly the Companies Court, should not seek to resolve issues of fact without cross-examination where there is credible affidavit evidence on each side. But I do not accept that the court is bound to hold that there is a need for a trial in circumstances in which, on a full understanding of the documents, the evidence asserted in the affidavits on one side is simply incredible.’

This passage is quoted with apparent approval in Coilcolour Ltd v Camtrex Ltd [2015] EWHC 3202 (Ch), paragraph 36.

(ii) the quoted passage from Chadwick J in Re a Company (No. 6685 of 1996) [1997] BCC 830, said to be from 838F, is in fact from 835F.

[26] Chief ICCJ Briggs in Barrowfen Properties Limited v Hambros Investments Limited, Anupam Investments Limited [2019] EWHC 2548 (Ch), said, at paragraph 17:

'The parties are agreed on the legal test to be applied, namely a requirement to demonstrate that the debt or debts are disputed on genuine and substantial grounds. The test is well established. In Coulson Sanderson & Ward (1986) 2 BCC 99 , 207 the Court of Appeal explained that the Court "should not on an interlocutory motion restrain what would otherwise be the legitimate presentation of a winding-up petition by someone qualified to present it, unless the company establishes on the evidence a prima facie case for holding that the petition would constitute an abuse of process.". It will be an abuse where the presenting party has no standing as a creditor. A substantial dispute is sufficient to demonstrate, for the purpose of injunctive proceedings, that a creditor has no standing: Re a Company (no 00751 of 1992) [1992] BCLC 869. I have been directed to Tallington Lakes Ltd v South Kesteven District Council [2012] EWCA 443 where Etherton LJ (as he was) explained (at para 22) "that the threshold for establishing that a debt is disputed on substantial grounds in the context of a winding-up petition is not a high one….and may even be reached even if, on an application for summary judgment, the defence could be regarded as "shadowy"". This is the test and the standard I shall apply.'

In Mulalley and Company Limited v Regent Building Services Limited [2017] EWHC 2962 (Ch), at paragraph 40, David Stone, sitting as a Deputy High Court Judge, said 'The principles to be applied on an application for injunctions to prevent the presentation of a winding up petition are well known.' before stating, at paragraphs 41 and 42:

'The court's power to grant an injunction in these circumstances stems from its jurisdiction to prevent an abuse of process: Coulon Sanderson & Ward Limited v John Francis Ward (1986) 2 BCC 99207.

As Park J said in Argyle Crescent Limited v Definite Finance Co Limited [2004] EWHC 3422 (Ch) at paragraph 9:

"On an injunction application such as that before me, the court does not have to decide whether a dispute to the petitioner's debt or a cross-claim against the position is valid. Indeed I would go further and say that the court ought to stop short of deciding those questions. However, the court does have to go into the argument sufficiently to be able to form a view about whether the dispute to the debt or to the cross-claim is put forward in good faith and has sufficient substance to justify it being determined in a normal civil action."'

[27] In Tallington Lakes Ltd v Ancasta International Boat Sales Ltd [2014] BCC 327 ('Ancasta'), David Richards J in the Court of Appeal said, at paragraph 4:

This principle is essentially a statement of general practice. A petitioner must establish its standing to present a winding-up petition. Those with standing are defined for present purposes by s.124 of the Insolvency Act 1986 and include any creditor or creditors. Where the company disputes any liability to a person petitioning as a creditor, it is taking issue with the petitioner’s standing to present the petition. It would in theory be open to the court dealing with the winding-up petition to try that issue itself, as in effect a preliminary issue. For at least three sound reasons, that is not the practice of the court. First, it is not the function of the Companies Court to try disputed debt claims. Its function, so far as winding-up petitions are concerned, is to decide whether the case is suitable for the class remedy of a winding-up order and, if so, to administer, principally through the official receiver or liquidator, the winding up. The determination of debt claims is a proper function of the county courts or, in appropriate cases, an action in the High Court. Secondly, the threat of winding-up proceedings could otherwise be used as improper pressure on a company to pay a disputed debt. Thirdly, the inevitable delay in determining the issue is unacceptably damaging to the company, whose freedom to carry on business may be severely curtailed by the existence of a pending winding-up petition. It is for this reason that the earlier practice of staying a winding-up petition while the issue of liability was determined in separate proceedings was abandoned in favour of striking it out.

At paragraph 39 of Ancasta, he said:

'The Companies Court is not the right court in which to engage in a detailed examination of claim and counterclaim.'

[28] Interestingly, HHJ Hodge QC, sitting as a Judge of the High Court in Re A Company [2016] EWHC 1548, considered it necessary, though having found £750 was indisputably due from the LLP/applicant for an injunction, to the petitioner/creditor, to go on and make findings about the petitioner/creditor’s belief in the solvency of the LLP when deciding to petition, at paragraphs 18 and 19:

‘I am satisfied that this is not a case where the winding up process is being used to exert pressure to pay a debt that is bona fide disputed on substantial grounds rather than to litigate it….I am also satisfied on the evidence that at the time the winding up petition was presented, the respondent entertained genuine concerns as to the solvency of the applicant LLP. She was concerned that the accounts were by then overdue. … The respondent inferred from that that the applicant was in a poor financial state…I am satisfied that there was some substance to the respondent's concerns about the financial status of the LLP at the time she presented the winding up petition.’

In Coilcolour Ltd v Camtrex Ltd [2015] EWHC 3202 (Ch), Hildyard J said, at paragraph 34:

‘…it is an abuse of process to present a winding-up petition against a company as a means of putting pressure on it to pay a debt where there is a bona fide dispute as to whether that money is owed: Re a Company (No. 0012209 of 1991) [1992] BCLC 865.’

[29]In Re A Company [1983] BCLC 492, Harman J at 495 said:

'Firstly it is trite law that the Companies Court is not, and should not be used as (despite the methods in fact often adopted) a debt-collecting court. The proper remedy for debt collecting is an execution upon a judgment, a distress, a garnishee order, or some such procedure. On a petition in the Companies Court in contrast with an ordinary action there is not a true lis between the petitioner and the company which they can deal with as they will. The true position is that a creditor petitioning the Companies Court is invoking a class right (see Crigglestone Coal Co. [1906] 2 Ch 327), and his petition must be governed by whether he is truly invoking that right on behalf of himself and all others of his class rateably, or whether he has some private purpose in view. It has long been the law that a petition presented for the purpose of putting pressure on the company is not properly presented: see In re a Company [1894] 2 Ch 349 and in a slightly different context Re Bellador Silk Ltd [1965] 1 All ER 667. The question for me, therefore, is whether I am satisfied that the petitioner seeks this winding up for the benefit of his class. I am not concerned with his motives or with the past conduct of the company, which was here deplorable or worse and which may have led the petitioner to have justifiable dislike for and a desire to see the downfall of some person such as the main protagonist in the company. In my judgment the Bryanston Finance case merely shows that in this field the rule which applies at common law, that malice or bad motive does not make unlawful that which is otherwise lawful (compare Bradford Corporation v Pickles [1895] AC 587) also applies. The decision in Bryanston Finance [1976] 1 All ER 25 never sought to overrule the basic law that the only proper purpose for which a petition can be presented is for the proper administration of the company's assets for the benefit of all in the relevant class. To hold otherwise would be to confuse motive, which is past, with purpose, which is future.

The question, therefore, is not "does the petitioner genuinely wish to wind up this company', as counsel for the petitioner (Mr. Littman) submitted. It would be hard for me to find that this petitioner, which has taken all regular steps to prosecute its petition and which plainly has reasons to desire the winding-up of this company, since that must put beyond cavil the future of the company's lease, does not in truth desire to wind up the company. In my judgment the true question is "for what purpose does the petitioner wish to wind up this company'. A judge has to decide whether the petition is for the benefit of the class of which the petitioner forms a part or is for some purpose of his own.

If the latter, then it is not properly brought. If the petitioner can show that he and his class stand together and will benefit or suffer rateably, then his ill motive is nothing to the point. But here it is plain that no such even-handedness exists.'

On the petition being a class remedy, reference can be made to Harman J in Re Southbourne Sheet Metal Co Ltd [1991] BCC 732, where he said, at 734:

'It is, of course, classically true and a matter always to be remembered that a winding-up petition is not a lis inter partes for the benefit of A as against B. It is the invoking by A of a class remedy for the benefit of himself and other members of the class. Nonetheless, it is (1) based upon a commercial interest of the person invoking the remedy, and [(2) it is for the benefit of himself, amongst other members of the class.'

[30] This passage was quoted with apparent approval by Chadwick J in Re a Company No.006685 of 1996, at 834.

[31]In Re Company (No.012209 of 1991), Hoffman J used slightly different phraseology when he said, at 354:

'In order to say that the respondent company is entitled to present a winding up petition I must come to the conclusion that that argument is either not put forward in good faith or that it has really no rational prospect of success. In my view it is not possible on the affidavit evidence to come to that conclusion. There is in my judgment a triable issue on that question, and if that is right then the whole question of whether the application for interim payment, which forms the basis of the statutory demand, was in accordance with the contract is something which is disputed and would have to be tried.'

However, later in the same case he said '... it is sufficient to say that there seems to me to be a bona fide dispute on substantial grounds in relation to the validity of the 6 September application.'

[32] see endnote 24