Howell v Lerwick Commercial Mortgage Corporation Ltd
| Jurisdiction | England & Wales |
| Judge | Lady Justice Arden |
| Judgment Date | 17 May 2017 |
| Neutral Citation | [2017] EWCA Civ 1138 |
| Date | 17 May 2017 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A2/2015/1673 |
[2017] EWCA Civ 1138
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION, BANKRUPTCY
(Mr Justice Nugee)
Royal Courts of Justice
Strand
London
WC2A 2LL
Lady Justice Arden
Case No: A2/2015/1673
The Applicant appeared in person
The Respondent did not attend and was not represented
This is a renewed application by Mr Howell for permission to appeal against the order of Nugee J dated 1 May 2015 dismissing an appeal from the order of District Judge Smart sitting in the Central London County Court, dismissing his claim to set aside a statutory demand served on Mr Howell by the respondent. The result of the order of Nugee J is that a statutory demand in a sum certainly above the minimum petitionable amount, was served on Mr Howell.
Mr Howell had issued a claim against the respondent in the County Court seeking damages for an alleged substandard valuation of a property. Initially, I understand, that judgment was entered against the respondent, but was set aside and Mr Howell was ordered to pay costs. There was an appeal which failed and he was again ordered to pay costs. Those two costs orders formed the basis of a statutory demand for £3,935. Mr Howell applied to set aside the statutory demand on the ground that he had a cross-claim. He had applied for leave to amend his claim in the County Court, but that was dismissed. Mr Howell claimed the return of the amount of the fee had had paid for the valuation and interest and costs. However, the judge held that his cross-claim fell short of the debt by around £600. I will say £650 for the purposes of this judgment. Mr Howell submitted the judge had not taken into account his claim for interest.
The judge found in Mr Howell's favour on those points, and held that there was a cross-claim to a certain amount. But he held the appropriate course was not to set aside the demand. At that time, a creditor serving a statutory demand had to have at minimum a debt of £750. Only immediately payable debts would justify presenting a bankruptcy petition. They had to be either judgment debts or statutory demands.
A bankruptcy petition could, said the judge, be based on one or more petitionable debts. There was no requirement that each such debt met the minimum level of £750. It was enough if the aggregate amount was at least £750. It followed that a statutory demand where the debt was partially disputed and the undisputed part was less than the minimum petitionable amount, was not necessarily to be set aside. The judge applied the decision of this Court in Re a Debtor (Nos. 49 and 50 of 1992) [1995] Ch 66. He held that a statutory demand should not necessarily be set aside under Insolvency Rule 6.5(4)(d) simply because the undisputed amount was less than £750 if there was evidence of other debts.
In the instant case Mr Howell relied on a cross-claim which fell short of the debt by less than £750, but there were other orders of the court for costs which could be taken into account, so it could not be said that any petition would inevitably fail. The creditor could turn to the other claims and put them into his bankruptcy petition, serve statutory demands for the other claims and rely on them in support of his petition. So, while Mr Howell won on a point concerning the amount of interest to be taken into account, the judge held that the appeal did not succeed. The amount of the undisputed part of the debt contained in the statutory demand was less than the minimum amount needed to present a winding up petition, but there was evidence of other debts.
The matter first came before the court in July 2016 but at that stage the respondent had been struck off the register so that there was no way the proceedings could proceed, but Mr Howell has recently obtained an order for the company to be restored to the register so that a dissolution is no longer a problem.
This is a second appeal so there has to be an important point of principle or practice and there also has to be an arguable point. Patten LJ was satisfied that there was an important point of principle or practice, because obviously the point which the judge took about allowing a statutory demand to stand where it was less than the minimum petitionable amount, was a point of practical importance which was worthy of consideration by this court.
Since the hearing before the judge, the amount of the minimum petitionable debt under section 267(4) of the Insolvency Act 1986, has been increased to £5,000. That means...
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