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TOM GIBSON MONTGOMERY v WANDA MODES LTD (2001)
Ch D (Park J) 21/12/2001
INSOLVENCY - COSTS
WINDING-UP PETITIONS : S.122 INSOLVENCY ACT 1986 : DISPUTED DEBTS : BONA FIDE DISPUTED : SUBSTANTIAL GROUNDS : CROSS-CLAIMS : GENUINE : SERIOUS : DAMAGES FOR BREACH OF COVENANT TO REPAIR : ORDER FOR COSTS : DELAY IN CROSS-CLAIM
The respondent company had a genuine cross-claim in relation to the debt upon which a winding-up petition against it was based so that the petition had been prematurely brought and would be dismissed. It was no part of the ratio of the decision in Re Bayoil SA (1999) 1 WLR 147 that the debtor should have been unable to litigate his cross-claim before the petition was brought.
Opposed petition for the winding up of the respondent company ('WML'). The petition was based upon an admitted debt of just over £6,500 in respect of legal costs that WML had been ordered to pay to the petitioner ('M') and which remained unpaid. The order for costs arose out of proceedings between WML as tenant and M as landlord under the Landlord and Tenant Act 1954. Thereafter WML began proceedings against M for damages in respect of expenses exceeding £61,000 incurred as a result of M's failure to repair the property in breach of repairing covenant. WML relied upon that claim for damages as a cross-claim entitling it to have the present petition dismissed.
HELD: (1) Where a winding-up petition was based upon an undisputed debt but the company had a genuine and serious cross-claim exceeding the amount of the petitioner's debt the court would, in the absence of special circumstances, exercise its discretion by dismissing or staying the petition. Re Bayoil SA (1999)1 WLR 147 applied. (2) WML's claim for damages was a "genuine and serious" cross-claim, notwithstanding that its commencement appeared to have been motivated by the anticipation of a winding-up petition. The evidence suggested that there were substantial arguments in WML's favour on the issue of non-repair. (3) Even though WML could have brought its claim for damages sooner, since the non-repair had existed since at least 1997, that did not preclude it from relying upon the principle established in Bayoil (supra). It was no part of the ratio of that decision that the debtor should have been unable to litigate his claim prior to presentation of the petition. Re a Debtor (No 87 of 1999) 2000 BPIR 589 followed.
Daniel Bromilow instructed by Morrisons (Redhill) for the petitioner. Jeremy Johnson instructed by Hugh Jones & Co for the respondent.
LTL 8/1/2002 : (2002) 1 BCLC 289
Document No. AC0102477
Authorised and regulated by the Solicitors Regulation Authority.Hugh-Jones LLP is a limited liability partnership registered in England and Wales (registered number OC357903, registered office as above) and is authorised and regulated by the Solicitors Regulation Authority. Any reference to partner in relation to Hugh-Jones LLP is to a member of Hugh-Jones LLP. "The word 'partner' is used to refer to a member of the LLP or an employee or consultant with equivalent standing/or qualification."