Re Sat-Elite Ltd

Approved Judgment

This is an appeal in somewhat unusual circumstances, which I will describe by reference to the facts stated in chronological order.

In this case, the company against whom the winding-up petition was presented was conducting the business of satellite television systems installation. In 1998, it entered an agreement with the petitioning creditor, which was a manufacturer of satellite television systems and associated hardware. The agreement was a sole distribution agreement in the United Kingdom. What, in effect, happened was that the petitioning creditor supplied the company with materials and equipment which the company then used in meeting orders for its customers for satellite television installations.

There was a breakdown in relationship between the petitioning creditor and the company in or about the year 2000, it being alleged on the company's side that by that date the sole agency that the petitioning creditor had granted to the company had been breached. This led, on 7th June 2001, to the petitioner sending a demand to the company for the payment of some £11,64The company's response to that was by letter of 11th June 2001, intimating that the company did not accept that amount as being due and that the company had a cross-claim against the petitioner, arising from its contractual relationship prior to the breakdown.

This appears to have been partially accepted by the petitioner because, on 16th July, the petitioner sent in an amended demand for the sum of £7,03That, again, appears not to have been accepted by the company because, in two letters of 6th and 16th September, they set out in some detail the extent of their cross-claim against the petitioning creditor. That summarised, at page 52 of the bundle (which is actually confusingly detached from the letter to which it belongs) the allegation by the company that they were owed by way of cross-claim some £9,495, which exceeded the petitioning creditor's debt of £7,03It appears that thereafter nothing happened until 9th December, when a further demand was made by the petitioning creditor's solicitors for the sum of £10,643, with payment to be made by 13th December against the threat of unspecified steps.

It is clear that there had been no dealings between the parties between 16th September and 9th December. So the petitioner cannot have been under the impression that, as a result of dealings, a further sum of £10,643 had become due. It is plain that that was not the case, because it appears that that demand of 9th December was based on invoices going back to 1999 and, therefore, must have included the matters which gave rise to the company's letter of 16th September.

There is an issue as to whether there was any response to the 9th December letter. The company produced a fax, which is dated 13th December, which appears to have all the necessary fax indications of despatch and receipt. This is an extremely confused document, but it would at least give the recipient, which was the petitioning creditor's solicitors, the message that the claim of 9th December was not accepted.

Be that as it may, nothing apart from that was done by the company and, on 9th January, a petition to wind up the company was presented, to be heard on 26th February. It seems that a copy of that petition was sent to the company on 10th January, but it was not formally served until the 15th. By 28th January, the company had instructed solicitors, and they wrote a letter to the petitioner, indicating that they needed to take instructions and that all correspondence in relation to the claim should be put through them.

No attempt, however, was made to restrain advertisement of the petition, which took place on 3rd February. Indeed, the company's cross-claim was not put forward by the company's solicitors until 19th February, when they wrote a letter to the petitioner's solicitors in these terms:-

"We refer to the above matter. We respectfully submit that the winding-up petition issued by your client is without merit or substance. Our client is able to defend this action and in fact has a counterclaim against your client. Kindly note that unless your client withdraws the petition forthwith, our client will strenuously defend its position and seek costs against your client. We shall forward a copy of our client's witness statement in support of our claim shortly."

There was a response to that letter from the petitioning creditor's solicitors on 20th February, when they referred to the 19th February letter, which was actually sent by fax, and they say:-

"It is noted that notwithstanding service of the winding-up petition being effective upon your client on 15th January, we have received no paperwork from you or your client in respect of any dispute. In the circumstances, the petition will not be withdrawn."

It is perfectly apparent that there had been paperwork by the date that this letter is written on 20th February indicating a dispute, not admittedly paperwork from the company's solicitors but rather the company's own letter of 16th September, in which the cross-claim had been formulated and given details.

On 25th February, the company's evidence was served and sent to the petitioning creditors. I have been shown a copy of that evidence. It plainly sets out a defence by way of cross-claim as to a liquidated sum of £3,780, but, as to the rest, a claim for damages to be assessed, but in respect of which there are particular figures, particularly at paragraph 33 of the witness statement, which shows that it was partially a liquidated claim. It is perfectly apparent from this witness statement that the position of the company was that they held a cross-claim (of which they gave details), which exceeded the petitioning debt.

The petition came on before Mr Registrar James on the following day, 26th February, when he gave directions for service by the petitioner of evidence in answer to the company's evidence. That evidence was not made available on the date specified by the Registrar and has never been filed. What actually happened was, on 7th March, the petitioner wrote to the company in the following terms:-

"We refer to the winding-up petition presented and advertised against your client by Strong (U.K.) Limited our client. Having taken our client's instructions upon your client's evidence, it is clear that there are no grounds for your client to dispute the petition. Furthermore, our client is mindful of the potential costs of this action and is concerned as to whether your client would be financially able to pay both the petition debt and the costs.

"In the circumstances, our client is prepared to accept payment of the sum of £5,000 plus costs in settlement of this action. However, in view of our client's obligations pursuant to the order of 26th February, this offer will only remain open until 12 o'clock on 10th March when it will be withdrawn."

Thereafter, a series of letters were exchanged between the petitioning creditor's solicitors and the company's solicitors, which conclude with a letter of 27th March, in which, in the third paragraph, the petitioning creditor's solicitors say:-

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