[1a] Insolvency Act 1986, section 267 provides (in so far as material):

'(1) A creditor's petition must be in respect of one or more debts owed by the debtor, and the petitioning creditor or each of the petitioning creditors must be a person to whom the debt or (as the case may be) at least one of the debts is owed.

(2) Subject to the next three sections, a creditor's petition may be presented to the court in respect of a debt or debts only if, at the time the petition is presented—

…

(b) the debt, or each of the debts, is for a liquidated sum payable to the petitioning creditor, or one or more of the petitioning creditors, either immediately or at some certain, future time, and is unsecured".'

[1b] A linked question, is whether this also applies to statutory demands? See Lyons v Bridging Finance Inc [2023] EWHC 1233 (Ch) about what grounds for dismissing a bankruptcy petition, are also grounds for setting aside a statutory demand (and what grounds are not).

[2] In Dusoruth v Orca Finance UK Ltd [2022] EWHC 2346, Mr Dusoruth was adjudged bankrupt. He then applied for an order, annulling the bankrupt order.

ICC Judge Mullen said, at paragraphs 108 to 122:

'108. The petitioner says that its claim is for a specific sum in the case of the American Express Debt and the Curzon Street Debt. In relation to the American Express Debt it says that Orca UK, having discharged Mr Dusoruth's liability, is subrogated to American Express's debt claim against him and can petition just as American Express itself could. Similarly, if Orca UK discharged Mr Dusoruth's personal liability to pay rent on Curzon Street, it would similarly be subrogated to the landlord's claim for the rent. Even if the lease were in Orca UK's name the rent was properly a liability of Mr Dusoruth. The debt is claimed in a specific sum. It is not a damages claim, which would plainly be unliquidated, and nor is it a claim for an account of Mr Dusoruth's use of company money. It would be open to Orca UK to seek such an account, but it does not have to do so. Its claim is for restitution for unjust enrichment and it can simply claim payment of the specific sum of money misapplied by him without any need for an accounting exercise. This is what it did and nothing further is required to quantify its claim. Mr Dusoruth may dispute liability for some or all of that debt but that does not render the claim itself a claim for an unliquidated sum.

109. Mr Dusoruth's position is that this is not open to the petitioner on the basis of long-established authority. I shall consider those authorities first before addressing [Counsel for the Dusoruth Respondent/Petitioner's] subrogation point. [Counsel for the Dusoruth Applicant/Bankrupt] relied on Hope v Premierpace (Europe) Ltd [1999] BPIR 695. Rimer J (as he then was) there considered an appeal from the district judge's refusal to annul a bankruptcy order on the grounds that it ought not to have been made. The petition was based on a claim that the debtor had misappropriated monies during his employment with the petitioner. The debtor in fact admitted that he had taken monies from the company but said that this was reimbursement of payments he had personally made on its behalf. The debtor had not attended nor been represented at the original hearing, having been told by an court official that the hearing had been adjourned. He applied to annul on that basis. The district judge dismissed the annulment application.

110. The appeal to the High Court was presented, first, on the basis that it was elementary the courts should not make final orders without giving the debtor the opportunity to be heard and it was inconceivable that the judge would have made the bankruptcy order had she known that the debtor had been misled as to the hearing date. There was only one way that the judge hearing the annulment application could properly have exercised her discretion in the circumstances and that was to annul the bankruptcy order.

111. That argument succeeded and Rimer J considered that he should deal with the matter on the basis of the argument that had been advanced before the district judge, without consideration of the underlying merits. The bankrupt had, however, obtained permission to argue the additional ground that the petition debt was not for a liquidated sum. Rimer J dealt with this at 699 as follows:

"The point Mr Rainey makes is that a creditor's petition can only be based on a debt for a liquidated sum (see s 267 of the Act ). If there is no such debt then the court has no jurisdiction to make a bankruptcy order. He submits that there is no such debt in this case. The company's claim is that the debtor stole the money. The debtor disputes that but, assuming the company is right, what is its cause of action to recover the money? Mr Rainey submits, and I did not understand Miss Bristoll to disagree, that the alternatives, in descending order of likelihood, are: (i) a claim for money had and received; (ii) a claim against the debtor as a constructive trustee; (iii) a claim in deceit; (iv) a claim for breach of an implied term in his contract of employment; and, (v) money paid under a mistake of fact.

Mr Rainey submits, and I agree, that claims (iii) and (iv) are claims for damages and cannot be claims for a liquidated sum. He also submits that claims (i), (ii) and (v) are claims for an account and payment and cannot be claims for a liquidated sum either.

I have no difficulty in accepting that claim (ii) can only be one for an account and payment. Mr Rainey did not show me any authority expressly demonstrating the proposition that claim (v) is also such a claim but I am prepared to accept that he is correct; and, in any event, I regard it as highly improbable that the company would so formulate its claim against the debtor. As to claims for money had and received the decision of the Court of Appeal in Portman Building Society v Hamlyn Taylor Neck (a Firm) [1998] 4 All ER 202 affirms that the remedy for such a claim is an account and payment. Millett LJ said at p 205d:

'By its writ the society maintains a number of alternative causes of action. It claims damages for breach of contract, the tort of negligence or breach of trust; compensation for breach of fiduciary duty; or repayment of moneys had or received to the use of the society. It is to be observed that, with the exception of the last, all are claims to recover monetary compensation for loss in consequence of a wrong alleged to have been committed by the firm. The last claim, however, is a straightforward claim in quasi-contract for money had and received or, as we would now call it, restitution. As counsel for the society acknowledged, the remedy for such a claim is not damages but an account and payment.'

Mr Rainey submits that it follows that none of the company's claims for a remedy is in the nature of an order for payment of a liquidated sum. It is irrelevant that the company claims to be able to identify its claim down to the last penny. It is still faced with the difficulty that its range of alternative claims against the debtor are claims for damages or for an account and payment. A claim for damages is not a claim for a liquidated sum; and nor is a claim whose remedy is that of an account, even though it may be that the taking of the account so ordered could be dealt with in a summary way and a judgment there and then given for a specific sum.

I accept that submission. I agree with Mr Rainey that the petition is not based on a debt for a liquidated sum. It follows that in my judgment no bankruptcy order could properly be made on it. I will therefore not merely discharge that order. I will also dismiss the petition."

[Counsel for the Dusoruth Applicant/Bankrupt] argued that that is exactly the position here. A claim for restitution for unjust enrichment, or money had and received to use the terminology in Hope v Premierpace, is a claim for an account and order for payment. The petitioner's claim is thus not for a liquidated sum.

112. [Counsel for the Dusoruth Respondent/Petitioner] argued that the statement in Portman Building Society v Hamlyn Taylor Neck (a Firm) [1998] 4 All ER 202 that the remedy for a claim for money had and received is an account and order for payment was based on a concession by counsel and was obiter dicta. An account is not "a remedy", is discretionary and is not necessary in all cases. Thus, in Libertarian Investments Ltd v Hall (2013) 16 HKCFAR 681 Lord Millett, sitting as a judge of the Hong Kong Court of Final Appeal, said:

"167. It is often said that the primary remedy for breach of trust or fiduciary duty is an order for an account, but this is an abbreviated and potentially misleading statement of the true position. In the first place an account is not a remedy for wrong…

168. In the second place an order for an account does not in itself provide the plaintiff with a remedy; it is merely the first step in a process which enables him to identify and quantify any deficit in the trust fund and seek the appropriate means by which it may be made good… Where the defendant is ordered to make good the deficit by the payment of money, the award is sometimes described as the payment of equitable compensation; but it is not compensation for loss but restitutionary or restorative.

…

172. At every stage the plaintiff can elect whether or not to seek a further account or inquiry. The amount of any unauthorised disbursement is often established by evidence at the trial, so that the plaintiff does not need an account but can ask for an award of the appropriate amount of compensation. Or he may be content with a monetary award rather than attempt to follow or trace the money, in which case he will not ask for an inquiry as to what has become of the trust property. In short, he may elect not to call for an account or further inquiry if it is unnecessary or unlikely to be fruitful, though the court will always have the last word."

It is notable there that, while Lord Millett states that an account is not a remedy, he nonetheless identifies it as the first step in a process enabling the claimant "to quantify" a loss and "seek the appropriate means" by which that loss can be restored.

113. Rimer J considered the point again in Navier v Leicester [2002] EWHC 2596 (Ch). This was again an appeal to the High Court. Mr Leicester sought to reverse the decision of the district judge setting aside a statutory demand presented against Mr Navier, who was the official receiver attached to the court. The alleged debt arose from the execution of a writ of fi. fa., apparently leading to damage to Mr Leicester's property and, the failure of the enforcement officer to account for property taken, including some £60,000 of cash. The official receiver in fact had no involvement in Mr Leicester's affairs at the time and no involvement in obtaining or executing the warrant. The district judge set aside the statutory demand on the basis that there was plainly a genuine and substantial dispute as to the debt. On appeal, Rimer J thought it "an almost unprecedented proposition" that the point was even arguable and the appeal would have failed on that basis alone. The judge himself also raised what he described as the "fairly obvious" point that the claims could not be regarded as claims for liquidated sums. He said at paragraph 20:

"Most of the claims are, quite obviously, claims for compensation for damage to his business and, therefore, are in the nature of claims for damages, which are obviously not claims for payment of a liquidated sum."

He went on at paragraph 21:

"The claim in respect of the £60,000 cash might be thought to be different, but, as it seems to me, the claim for that would be a claim for money had and received, or, as it is more popularly known nowadays, a claim for restitution. So it is a claim for an account and payment and not a claim in debt, and it makes no difference that the claim can be calculated down to the last penny. I had occasion to consider points such as this in my decision in Hope v. Premierpace (Europe) Ltd [1999] BPIR 695, at 699. I expressed the view in that case that a claim for an account and payment was not one for debt which could form the subject of a statutory demand. I have no reason to depart in this case from the view I expressed in that one. Again, however, I have not heard from Miss Markham on that point, and it is not necessary for the purposes of the disposition of this appeal."

[Counsel for the Dusoruth Respondent/Petitioner] thus notes that the point was obiter, unargued and unanalysed in Navier and is not clothed with the status of ratio by which I am bound.

114. In Truex v Toll [2009] EWHC 396 (Ch) a solicitor sought to bankrupt his former client for unpaid fees, which had not yet been assessed. The Chief Registrar at first instance held that the sum due must exceed the statutory minimum required to found a bankruptcy petition. He gave permission to appeal. Proudman J held that the fees had not been judicially assessed and did not constitute a liquidated sum to any extent. She said:

"36. In my judgment whether a sum is liquidated and whether there is a defence to the claim are separate issues and the first must be determined before the second is addressed. Accordingly any admission, acknowledgment or agreement converting the amount claimed from an unliquidated to a liquidated sum must be one from which the client has bound himself not to resile. A mere acknowledgment would be insufficient to bind him to forego judicial assessment or determination.

37. On this basis it was not possible to say that any part of the work done by Mr Truex had been quantified, or was quantifiable by the bankruptcy court as a mere matter of arithmetic. It seems to me that the chief registrar conflated the issue of whether there was a genuine dispute about a liquidated debt with that of whether the sum claimed was liquidated in the first place. The bill as a whole was capable of challenge as to quantum, was thus for an unliquidated sum and did not fulfil the requirement of section 267. The same point applies to the chief registrar's alternative finding that there could not be a genuine dispute as to at least £750 of the costs."

I pause there because I have, in my discussion above, dealt with the question of dispute first. That is because that question was dealt with first by way of cross-examination and then in counsel's submissions. It is of course right that, logically, the question of whether a debt can found a petition at all is a threshold question that must be answered before one needs to move on to the question of whether, if so, it is disputed. The potential for dispute must not however cloud the question of whether the debt is a liquidated sum in the first place.

115. The principle was discussed again by Briggs J, as he then was, in McGuinness v Norwich and Peterborough Building Society [2010] EWHC 2989 (Ch). This was an appeal from the decision of a deputy registrar to make a bankruptcy order on a petition based on sum due under a guarantee agreement. He held that the agreement created a liquidated liability in debt rather than an unliquidated liability in damages. On appeal, Briggs J held that the deputy registrar had been correct to characterise the obligation as one of debt, but he observed:

"23 … It was a liquidated sum within the meaning of section 267(2)(b) of the Act. It is therefore unnecessary for me to decide whether, as Ms Start submitted, I should depart from the decision in Hope v Premierpace (Europe) Ltd [1999] BPIR 695. None the less, and in case the issue should arise again, I will make the following observations about it.

24 The first is that it does seem remarkable that a person from whom £1,000 has simply been stolen should be unable to present a bankruptcy petition (following a statutory demand), whereas a person with a £1,000 contract debt may do so, always assuming that there is not a bona fide defence to either claim on reasonable grounds. As Proudman J said in Truex v Toll [2009] 1 WLR 2121, 2129, the question whether a sum is liquidated and whether there is a defence of the claim are entirely separate issues.

25 Secondly, I have real doubt whether distinctions based on different causes of action (ie debt, account and payment, damages) satisfactorily address the purpose behind section 267(2)(b) of the Act, which seems to me to distinguish between cases where there is no issue as to the amount of a liability, and cases where some process of assessment by the court is necessary, before the amount can be identified. I can well understand that a claim for an account which depends upon the defendant providing disclosure as to the amount of an alleged secret profit cannot possibly be a claim for a liquidated sum. By contrast, a claim to recover stolen money, where the precise amount stolen is known by the claimant, seems to me in principle to be a claim for a liquidated sum, even though the form of action is one for account and payment."

116. On a further appeal to the Court of Appeal, reported at [2011] EWCA Civ 1286, Patten LJ carried out an extensive review of the authorities which I do not propose to repeat in full but I will set out some parts of it. He identified the introduction of the term "liquidated sum" in the Bankruptcy Act 1869 as a codification of the earlier decisions of the court not admitting to proof debts which were not quantified and had to be determined by a jury. He said:

"[36] These authorities indicate and I think establish that a debt for a liquidated sum must be a pre-ascertained liability under the agreement which gives rise to it. This can include a contractual liability where the amount due is to be ascertained in accordance with a contractual formula or contractual machinery which, when operated, will produce a figure. Ex parte Ward is the obvious example of that. Claims in tort are invariably unliquidated because they require the assistance of a judicial process to ascertain the amount due by way of damages. In some cases the calculation of the award will be straightforward and obvious but the unliquidated nature of the claim excludes it from being a good petitioning creditor's debt which satisfies the requirements of s 267 of the 1986 Act.

[37] The most obvious use of the term 'liquidated' has been in relation to liquidated damages. 'Liquidated' has been defined judicially as meaning the sum which the parties have by their contract assessed as the damages to be paid for its breach: see Wallis v Smith (1882) 21 ChD 243, at 267, per Cotton LJ. If a genuine pre-estimate of loss the provision is enforceable according to its terms. I would therefore regard a claim for liquidated damages as one for a liquidated sum within the meaning of s 267 of the 1986 Act unless a claim in damages is excluded by the use of the word 'debt'.

[38] Another familiar context in which the word 'liquidated' appeared was RSC Ord 13 which governed when a plaintiff could enter final judgment against a defendant who failed to give notice of intention to defend. Final judgment could only be entered when the writ was endorsed with a claim for a liquidated demand: see RSC Ord 13, r 1. Claims in debt or for liquidated damages fell within this rule but it did not include claims in tort where the damages were necessarily unliquidated or those for contractual damages where the measure of liability was not specified in the contract itself.

[39] The authorities in the field of bankruptcy as to what constitutes a liquidated sum are consistent with this approach. In Re Broadhurst the measure of liability under the contract was readily calculable but that did not make it a liquidated claim. As Maule J put it in his judgment, there was no specific sum engaged to be paid to the creditor."

117. He went on to deal with Hope v Premierpace as follows:

[40] For this reason Hope v Premierpace (Europe) Ltd [1999] BPIR 695 was in my view correctly decided on its facts. The misappropriation by the employee of money from his employer gave rise in that case to an obvious liability either for money had and received or for breach of trust or for deceit. But as Rimer J held, none of those claims is for a liquidated sum properly so-called. They are all claims for monetary compensation in a sum equivalent to the employer's loss…

[41] Read in context, the judge was not saying that a claim in damages could not be a debt within the meaning of s 267 of the 1986 Act regardless of the nature of the claim. All that he was asked to decide was whether the claims on which the petition was based were for a liquidated sum."

118. [Counsel for the Dusoruth Respondent/Petitioner's] submission was that Hope v Premierpace was thus approved on its particular facts and Rimer J's obiter observations did not constitute a statement of principle. He referred me further to Goff & Jones: The Law of Unjust Enrichment (9th ed) at paragraph 1-44, which says:

"A claim for restitution on the ground of unjust enrichment is not a claim for damages or equitable compensation founded on the commission of a civil wrong, but a claim for a liquidated sum that is treated as a claim in debt for procedural purposes. This is true not only of claims for the value of a money payment, but also of claims for the value of services or goods which must be quantified before the court can make an order against the defendant."

To similar effect is the statement in Chitty on Contracts (34th Ed) at paragraph 32-068, to which [Counsel for the Dusoruth Respondent/Petitioner] also referred me, that:

"the unjust enrichment claim has procedural and evidential advantages in that it is a liquidated claim"

The English authority given for the first of the two scenarios in the second sentence in the footnote to the extract from Goff and Jones, to which I was not referred, is Merito Financial Services Ltd v Yelloly [2016] EWHC 2067 (Ch). Master Matthews considered claims of misappropriation by a director from a company of certain sums (referred to as "category b." by the Master) and the submission of false claims for business expenses in breach of trust or his fiduciary duty (referred to as "category d."). At paragraphs 45 to 47 of his judgment Master Matthews considered these claims as follows:

"45. As to categories b. (excluding c.) and d., the claims are also to specified sums, but rather as money had and received, or in old fashioned terms for indebitatus assumpsit, rather than as compensation for wrongs committed. In the prayer, the Claimant asks for 'restitution of all sums which the Defendant has received or is deemed to have received and by which he is unjustly enriched'. The wording in the Claim Form is more or less the same.

46. As Farwell LJ made clear in the citation from Lagos v Grunwaldt [1910] 1 KB 41, above, many of the different causes of action now subsumed within the theory of unjust enrichment/restitution were historically grouped under the old heading indebitatus assumpsit. A cause of action which gave rise to what was called an indebitatus assumpsit, if proved, resulted in a judgment for a money sum, and similarly therefore, in the case of a default judgment. Many of these causes of action were pleaded as 'money had and received to the use of the plaintiff' or 'money paid at the request of the defendant'.

47. In my judgment, if before the development of the unified theory of restitution a particular cause of action would have justified a default judgment for a sum of money rather than a judgment for damages to be assessed, it should and does not cease to justify that judgment merely because a group of academic lawyers (and, to a more limited extent, judges) have regrouped such claims under the banner of a different theory, namely unjust enrichment, which may include claims which have to be assessed. That would be the worst kind of academic interventionism. Litigants' rights and remedies must not depend on the state of academic discourse from day to day. And any cause of action giving rise to a liquidated demand under the RSC will now give rise to a claim for 'a specified amount of money', because this expression is at least as wide, and probably wider."

He held that those two categories were claims for "a specified amount of money" for the purposes of the Civil Procedure Rules and that default judgment could be entered for the amount claimed, together with interest, rather than for damages to be assessed.

120. The footnote to the passage from Chitty on Contracts cites Biggerstaff v Rowatt's Wharf [1896] 2 Ch 93. In that case, the question arose as to whether a claim for monies had and received for a consideration that had wholly failed in respect of undelivered barrels of oil could be set off against unpaid rent. The judge at first instance held that it could not, the claim in respect of the barrels being unliquidated and the claim in respect of rent being liquidated. The Court of Appeal disagreed. Kay LJ said at 105:

"The point chiefly argued below seems to have been that Harvey, Brand & Co.'s claim against the company was a claim for unliquidated damages. But they bought from the company and paid for 7000 barrels at 3s. 6d. each; there was a short delivery, and they have a claim against the company of 3s. 6d. for each of the barrels which the company failed to deliver. As to those barrels there was a total failure of consideration, and Harvey, Brand & Co. had a liquidated claim for money had and received, and had before the appointment of the receiver an inchoate right of set-off."

121. The passages from the two practitioner texts relied upon by [Counsel for the Dusoruth Respondent/Petitioner] do not assist me. As the passage from Goff & Jones states on its face, and consideration of the authority puts beyond doubt, it is addressing a question of procedure and the ambit of a "claim for a specified amount of money" for the purposes of a request for default judgment under CPR Part 12. The treatment of a sum claimed in a prayer for relief for the purposes of a procedural judgment in default does not seem to me to be determinative of the substantive requirements of section 267 IA 1986. Although the Rules of the Supreme Court had previously used the term "liquidated demand" rather than "claim for a specified amount of money", the superficial similarities of the expressions "liquidated demand" and "liquidated sum" do not mean that the same approach is to be applied. It is clear from the judgment of Patten LJ in McGuiness, at paragraph 38, that he had in mind the use of the expression in the default judgment context but it did not lead him to doubt Rimer J's approach to the question of what constituted a claim for a liquidated sum in Hope v Premierpace. Similarly, the treatment of cross-claimed sums for the purposes of the rules of set off is also an entirely different context.

122. I do not read Patten LJ's judgment as suggesting that Hope v Premierpace is confined to its facts. He was observing that it was not authority for the proposition that a claim for damages can never be regarded as a claim for a liquidated sum. It appears to me that it is good law as to the principle of what can be regarded as a liquidated sum for the purposes of section 267 IA 1986. Indeed, he says in terms that a claim for money had and received is not a liquidated sum within that section. Moses and Ward LJJ agreed. I am bound by the Court of Appeal's decision in that regard.'

[3] For completeness, the whole of paragraph 123 in Dusoruth v Orca Finance UK Ltd [2022] EWHC 2346 reads:

'The law is that a liquidated sum is a sum that that is "pre-ascertained" or "a specific amount which has been fully and finally ascertained", although that allows for calculation in accordance with a contractual formula or mere addition. The question of whether a debt is for a liquidated sum must be kept distinct from whether it is disputed. A person may have no prospect of defending a claim for damages, or unassessed solicitors' fees, in excess of the statutory minimum but that does not convert the claimed sum into an unliquidated sum. By the same token it does not matter whether the petitioner puts a figure on his claim, even if he can calculate it "down to the last penny". It must be liquidated either because the quantification of the debt is one from which the debtor is not permitted to resile as a matter of admission, acknowledgment or agreement, or because it has been determined as a matter of the court process.'

[4] In King v Bar Mutual Indemnity Fund [2023] EWHC 1408 (Ch) HHJ Kelly, sitting as a judge of the High Court, said, under the subheading 'Applicable legal principles', from paragraphs 40 to 59 (BMIF served the statutory demands; the Kings applied to have them set aside):

'40. The general principle is stated in Muir Hunter on Personal Insolvency, Vol 1 at paragraph 3-308 and 6-047:

"3-308: It is, and always has been, essential (see, e.g., In the Matter of John Charles, a Bankrupt (1811) 14 East. 197 KB) for the petitioning creditor's claim of indebtedness against the debtor to be "liquidated" in order to sustain, under the old law, a bankruptcy notice or petition, and now, under the new law, a statutory demand or a petition. As appears from the terms of subs.(2), and as emphasised by Registrar Simmonds in Re Le Winton unreported 31 July 2007, the debt must have been liquidated at the time the petition was presented; any post-petition agreement or conduct is irrelevant…

"6-047: The decisive hallmark of a liquidated claim is that the process of quantification is already complete…".

41. The Kings also rely upon the CPR. As there has been no detailed assessment, the Court could disallow all the costs. The Court could also find that the costs are as unreasonable as the Kings assert, or that a challenge under CPR 44.11 may succeed.

42. The Kings rely primarily on the decision of Proudman J in Truex v Toll [2009] EWHC 396 (Ch). Mrs Toll retained her solicitor Mr Truex to act in matrimonial proceedings. Mr Truex issued a statutory demand for his fees due. Mrs Toll applied to have it set aside on the basis that it was unliquidated. Proudman J accepted as uncontroversial that solicitors' costs which have not been "assessed by the costs judge or determined in an action" are not a liquidated sum.

43. However, agreement of the costs bill between solicitor and client can convert an unassessed bill into a debt capable of founding a bankruptcy petition. She cited the principle in Muir Hunter that:

"…in order to convert what is clearly an unliquidated sum to a liquidated sum there must be…clear and unequivocal conduct or agreement on the part of the debtor to demonstrate acceptance of those bills of costs such as to forego the right of assessment and to convert them to a liquidated sum."

44. The question was therefore whether Mrs Toll had accepted Mr Truex's invoices. As set out at paragraphs 26 and 27 of the judgment, Counsel for Mrs Toll said that a bare acceptance was not sufficient:

"Mr Macpherson, Counsel for the debtor, submitted that it was insufficient to find a bare admission, agreement or acknowledgement that Mr Truex's invoices were correct. Where a debt is of an unliquidated sum because it has not been judicially assessed or determined that sum can only become liquidated if the client is bound by the admission, agreement or acknowledgment relied upon. Thus Mr Macpherson said that one must look for a waiver of the right to assessment or determination. In order to constitute such a waiver, the client's conduct must be supported by consideration or give rise to an estoppel.

"Doubtless a bare admission coupled with failure over a long period to challenge the bill would be strong evidence that the bill was reasonable. However, submitted Mr Macpherson, such conduct would not be enough to convert the amount of the bill from an unliquidated to a liquidated sum…"

45. Proudman J accepted this at paragraph 36, holding that:

"any admission, acknowledgment or agreement converting the amount claimed from an unliquidated to a liquidated sum must be one from which the client has bound himself not to resile. A mere acknowledgment would be insufficient to bind him to forego judicial assessment or determination."

An agreement for consideration or conduct giving rise to an estoppel according to established principles was necessary.

46. One reason for her decision was that she found it absurd that whenever the client changed their mind about whether to agree to the costs bill, the debt would change from being liquidated to unliquidated or vice versa.

47. On the facts, she found that there was neither consideration for Mrs Toll's agreement nor an estoppel to bind her. Mr Truex did not act "to his detriment in incurring the cost of the statutory demand and the petition" and "seeking to enforce the debt itself cannot constitute a sufficient alteration of position to found an estoppel. If it could there would be an estoppel in virtually every case". Therefore, Proudman J set aside the creditor's petition on the basis that the debt was unliquidated. She noted that in any event, even if consideration or estoppel were unnecessary, Mrs Toll's alleged acceptance was not sufficiently clear and unequivocal.

48. The BMIF asserts that Truex v Toll is not directly relevant to this case. Even accepting Proudman J's dicta, the BMIF says that the amount of the claim for costs in that case was not judicially determined, whereas it has been in the Costs Order in the sum of £219,700. This they assert is the starting point. The only issue is whether the fact that the £219,700 is subject to a right of assessment turns the otherwise liquidated sum into an unliquidated sum.

49. However, Proudman J did make some relevant observations at paragraph 40, albeit obiter, on this point. She said:

"However it seems to me that the fact (if such is the case) that public policy requires the client to be able to seek assessment of a solicitor's bill even after having reached an otherwise binding agreement is merely a reason why the court ought not to make a bankruptcy order on a petition likely to be the subject of assessment under the Act. The availability of assessment does not prevent an otherwise binding agreement converting what was previously the solicitor's mere estimate of proper costs into a liquidated sum capable of founding a petition under s.267 of the 1986 Act " (emphasis added).

50. The directly relevant case the BMIF cited was Rocha-Afodu v Mortgage Express [2013] 9 WLUK 4. The statutory demand there also arose out of a costs order made by a District Judge where:

"it was ordered that the Applicant's claim be dismissed and he pay the Respondent's costs of the case, subject to detailed assessment on the standard basis if not agreed, and further that the Applicant make an interim payment on account of costs to the Respondent in the sum of £50,000, to be paid by 4.00 pm on 27 April 2012."

51. In her judgment, Registrar Derrett said:

"The Applicant has put forward a number of grounds as the basis for setting aside the Demand. … In addition he maintains that the sum claimed is not a liquidated debt which can be relied upon for the purposes of a Demand. I do not agree[.][T]he district judge's order, a copy of which is in the papers before me, provided for an interim payment on account of costs in the sum of £50,000 to be paid by 4 pm 27 April 2012. There is no stay in place and no appeal in relation to that sum; therefore it is, for the purposes of a Demand, a liquidated debt."

52. The BMIF also rely by analogy on other cases. Firstly, they rely on Irving v Penguin Books Ltd [2002] EWHC 1387 (Ch). The statutory demand there arose out of an interim order for costs. Peter Smith J observed at paragraph 14 of the judgment:

"…the order for the interim payment can form the subject matter of the bankruptcy petition, whether or not on the subsequent detailed assessment the order would be reversed. […] It is perfectly open to a judgment creditor in respect of an interim payment to enforce that (if that is the right word) by way of bankruptcy proceedings" (emphasis added).

53. Secondly, they rely on Blavo v Law Society [2018] EWCA Civ 2250. The statutory demand there arose out of an order pursuant to paragraph 13 of schedule 1 of the Solicitors Act 1974, which provided that some costs incurred by the Law Society "shall be paid by the Solicitor or his personal representatives and shall be recoverable from him or them as a debt owing to the Society".

54. The Court of Appeal considered whether this debt was a liquidated sum within section 267(2)(b) IA 1986. Moylan LJ, in giving the judgment of the court, held that it was. He took as his starting point McGuiness v Norwich & Peterborough Building Society [2011] EWCA Civ 1286, where Patten LJ held that "a debt for a liquidated sum must be a pre-ascertained liability".

55. Moylan LJ said that the reason why in general a claim by a solicitor for their bill is unliquidated is because the solicitor was entitled to a "reasonable and fair remuneration for the work they have done" and that was unquantified. However, the judge went on to say:

"107. I would emphasise "in general" because it is possible for a claim by a solicitor to be for a predetermined amount. For example, as was said by Evans LJ in Turner & Co v O Paloma SA [2000] 1 WLR 37, 40 G: 'If a solicitor wishes to be paid and is not in funds he will need to sue and prove that his charges were either expressly agreed or are reasonable charges'. (My emphasis)…

"108. …if the amount of the fees has been expressly agreed, there is no reason why they cannot be for a liquidated sum.

"109. I do not see that Truex v Toll [2009] 1 WLR 2121 decided other than in accordance with these principles…

"110. Further, I would agree with Proudman J when she said that the "availability of assessment does not prevent an otherwise binding agreement converting what was previously the solicitor's mere estimate of proper costs into a liquidated sum capable of founding a petition": para 40…

"111. It is clear to me that the basis or nature of a solicitor's claim for their charges is separate from the ability to seek an assessment. The existence of such a right does not turn what is otherwise a claim for a liquidated sum into a claim for an unliquidated sum." (emphasis added).

56. The test was whether the instrument creating the debt created a "pre-ascertained liability" and, accordingly, a debt for a liquidated sum. On the facts, Moylan LJ held that the order pursuant to paragraph 13 schedule 1 of the Solicitors Act 1974 was a pre-ascertained liability.

"115 Applying the approach set out in McGuiness's case… is the sum due under paragraph 13 a pre-ascertained liability? Is it, adapting Patten LJ's words, a liability where the amount due is to be ascertained in accordance with a pre-determined formula or machinery which, when operated, will produce a figure? In my view, the unequivocal answer to both questions is yes. The statutory provisions, namely "any costs incurred by the Society for the purposes of this Schedule … shall be paid by the Solicitor", constitute a pre-determined formula or machinery which, when applied, will produce a figure. This creates a debt for a liquidated sum.

"116 As referred to above, I do not consider that it is now open to Mr Blavo to seek to challenge the sums claimed in the statutory demands as not being "costs incurred". This does not mean, of course, that a defence cannot otherwise be advanced, or r. 6.5(4)(b) of the 1986 Rules, would be otiose. Nor does it mean that, subject to the relevant provisions, an assessment cannot be sought. But neither of these issues affect the liquidated character of the sum due.

"117 In contrast, the judge considered that the existence of a right to an assessment was "inconsistent with the proposition that, as a generality, the liability under paragraph 13 is a pre-ascertained one": para 42, and that it would be odd if "the underlying basis for the statutory debt was generally an unliquidated sum … but the statutory debt was not": para 45. I do not agree. First, as referred to above, the right to an assessment does not mean that the debt is not a liquidated sum" (emphasis added).

57. Thirdly, they rely on Axnoller Events Ltd v Brake [2021] EWHC 1500 (Ch) . This case also concerned a debt arising out of a costs order subject to a right of assessment, pursuant to CPR 44.2(8). However, it was relied on not for the purposes of issuing a statutory demand. Rather, the debtor was seeking to argue that it was a 'moratorium debt' under the Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020, in which case the creditor would temporarily be prevented from enforcing the debt. Although the term 'debt' was not defined in the Regulations, HHJ Paul Matthews sitting as a judge of the High Court decided that, as in ordinary language, it could only arise over liquidated sums.

58. On the facts, he distinguished between two types of orders. The first was an order he made on 2 May 2021 that the Brakes pay the Guy parties' costs on an indemnity basis, to be subject to detailed assessment if not agreed. He did not have a costs statement and so was unable to order a payment on account pursuant to CPR 44.2(8). He held that this order did not give rise to a liquidated sum being payable.

59. However, a costs statement having been sent to the court, he held that he would make an order under CPR 44.2(8) and, on this order, the judge assumed that it would qualify as a liquidated sum. The crucial passage is at [22] of the judgment:

"In the present case I made an order on 2 May 2021 that the Brakes pay the costs, to be assessed, if not agreed. That was a few days before the moratorium for Mr Brake began on 6 May. The order of 2 May undoubtedly created a contingent liability of uncertain amount. But it could not be enforced before being liquidated (by agreement or assessment) in a certain sum. Any order I make now will (partly) liquidate that contingent liability. In ordinary language a "debt" is a liquidated sum that is due and owing: see eg Webb v Stenton (1883) 11 QBD 518, CA. In my judgment that is also its meaning in the regulations. Thus, the order of 2 May 2021 did not create a debt for the purposes of the regulations. On the other hand, any order I now make ordering a sum to be paid on account will create a debt, which will be a qualifying debt…".'

[5] In King v Bar Mutual Indemnity Fund [2023] EWHC 1408 (Ch) HHJ Kelly, sitting as a judge of the High Court, said, at paragraphs 64 to 67:

'64...The Costs Order was made after an assessment by Cockerill J. It may have been that she decided the figure by taking various matters on trust. She did however decide and assess what sum should be paid on an interim basis. The interim assessment procedure has therefore been completed. The Kings' second submission is more controversial. They assert that for a debt created by a costs order to be liquidated, a detailed assessment must have taken place such that the sum is not open to later challenge.

65. I do not accept this. In my judgment, the mere fact that the £219,700 is subject to a right of assessment and may change in amount does not turn an otherwise liquidated sum into an unliquidated sum. The authorities cited above point towards this conclusion. This includes the authority relied upon by the Kings' of Truex v Toll. Further and in any event, in my judgment the facts of that case can be distinguished. Truex concerned a debt arising out of an unassessed solicitor's bill which needs to be determined by principles such as reasonableness and fairness. In this case, the Statutory Demand Debt was based on a court order. The court crystallised the amount payable on an interim basis at £219,700.

66. The Kings' argument effectively equates 'liquidated' with 'final'. I do not accept that this is right as a matter of principle. The argument conflates arguments under sections 267(2)(b) IA 1986 (liquidated sum) with rule 10.5(5)(b) IR 2016 (disputed debt). The mere fact that a sum of money is subject to change does not alter its nature as a liquidated sum.

67. Further and in any event, given that most costs orders will be made subject to a detailed assessment if not agreed, the Kings' argument would essentially rule out all interim costs orders as being capable of founding a statutory demand. In my judgment, that cannot be right.'

[6] In Khan v Singh-Sall [2023] EWCA Civ 1119 ('Singh-Sall'), on the facts, Nugee LJ held (as was accepted) that the Bank's claim on the guarantee against the bankrupt was a debt not a claim for damages (to simplify somewhat: Mr Khan was the bankrupt/giver of personal guarantee; Geno was his company/principal debtor, and the bank was the creditor/receiver of the personal guarantee). Nugee LJ said, at paragraph 29-30:

'...in the present case the guarantee given by Mr Khan was undoubtedly of the former type as it provided that Mr Khan undertook to make good and pay on demand to the Bank any default in the payment by Geno of its liabilities, and [Mr Khan's advocate] rightly accepted that the Bank's claim was a claim in debt not for damages.

It follows that the claim was for a liquidated sum. The fact that it was disputed, and, as DJ Hart found, that there was a genuine triable issue as to whether it was due, does not affect this. It does not change the nature of the claim, or convert it from being a liquidated one to an unliquidated one. It no doubt means that the claim is an uncertain one in the sense that until the question has been tried it cannot be known whether it is a good one or not; but that is not the relevant sense in which a liquidated sum must be certain. The relevant sense as I have explained is that the claim must be for a definite amount owed as a debt. The Bank's claim under the guarantee was.'