Tallington Lakes Ltd and Another v Ancasta International Boat Sales Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice David Richards,Lord Justice Patten,Lord Justice Thorpe |
| Judgment Date | 20 December 2012 |
| Neutral Citation | [2012] EWCA Civ 1712 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A2/2011/0876 |
| Date | 20 December 2012 |
[2012] EWCA Civ 1712
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT
(HIS HONOUR JUDGE PELLING QC)
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Thorpe
Lord Justice Patten
and
Mr Justice David Richards
Case No: A2/2011/0876
Mr Neil Morgan appeared in person and on behalf of the First Appellant
Mr Matthew Smith (instructed by Payne Hicks Beach) for the Respondent
Hearing date : 29 November 2012
This is an application for permission to appeal against an order striking out a winding-up petition, with the appeal to follow immediately if permission is given. The court heard full argument on the issues which arise if permission to appeal is given.
The petition was presented on 17 September 2010 by Tallington Lakes Limited (Tallington), claiming to be a creditor of Ancasta International Boat Sales Limited (the company) for sums totalling £103,129.79. The company disputed that it owed any sum to Tallington and applied on 8 October 2010 to strike out the petition. A substantial volume of evidence was filed by both parties and the application was heard by HHJ Pelling QC (sitting as Judge of the High Court in the Chancery Division) on 24 March 2011. For the reasons set out in his judgment on 25 March 2011, the Judge held that Tallington's claim to be a creditor was genuinely disputed on substantial grounds and accordingly he ordered the petition to be struck out.
Tallington was represented before the Judge, as it was before this court, by its controlling director, Neil Morgan. Mr Morgan applied to the Judge to be joined himself as a co-petitioner. This was not opposed by the company and the Judge acceded to the application. Mr Morgan did not claim to be a creditor in respect of any sums other than those already claimed in the petition and it would appear that his application to be joined was intended to forestall any argument that the debt, if any, was due to him, not the company. It does not appear that any such argument was pursued by the company before the Judge, nor was it advanced in this court.
There was no dispute before the Judge, nor has there been in this court, on the applicable legal principle. It can be shortly stated. 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, none of which is relevant to this case.
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 section 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.
Tallington's claims arise in relation to a new sailing yacht purchased in April 2007 from the company at a price of £305,456.The yacht was built in France by Beneteau, a well-known French yacht-builder, and various items of equipment were supplied and installed in France by the company's sub-contractors. The yacht was delivered to Mr Morgan at Port Grimaud in the South of France on 31 May 2007.
The purchase of the yacht was made pursuant to a written contract dated 4 April 2007 (the sale agreement), which incorporated the company's standard terms and conditions.
Tallington's claims relate to alleged defects with the yacht and its equipment. The Judge summarised the position in paragraph 5 of his judgment:
"….. it is alleged by Mr Morgan that it quickly became apparent that the yacht suffered from a number of defects, none of which were serious in themselves but each of which consumed time and money to put right and, at least potentially, made the yacht unusable for a time. There are a significant number of e-mails recording the complaints made, which included amongst other things an alleged defect to the bow thruster; defects in the air conditioning system; defects concerning the electrical instrumentation on the yacht and defective installation of the yacht's rig (that is, her mast and standing rigging). There were also alleged defects concerning a battery charger which required, so it is alleged, the replacement of the battery charger and also of a number of substantial marine batteries which had been damaged as a result of the defects in the original battery charger".
Mr Morgan notified the company of the alleged defects in emails from July to October 2007. He caused repairs to be made and spent, he says, a good deal of his own time dealing with the defects.
The sum claimed by Tallington was just under £10,000 in October 2007. There was a gap of five months in the correspondence from December 2007 to May 2008, when £30,476 was claimed. By September 2008, the claim had increased to £79,902. There was no further correspondence until 30 June 2010 when the same sum was claimed, rising to over £103,000 in September 2010 when the petition was presented.
There were threats of legal proceedings against the company from an early stage. In an email dated 10 September 2007, Mr Morgan, on behalf of Tallington, threatened "to issue proceedings in the County Court against you for the recovery of the costs incurred and the work undertaken in dealing with the many faults present on the boat", in the absence of satisfactory proposals dealing with the claim. In November 2007, Mr Morgan said that the particulars of claim were being drafted and in June 2008 he said that if the matter was not very shortly settled he would ask his solicitors immediately to prepare particulars of claim. In June 2010, Mr Morgan resumed his correspondence after a 21 months pause with a short email, reasserting the claim for £79,000 and stating:
"I think that it is about time that you refunded my money now.
What would you prefer? A claim in the High Court or a winding-up petition issued in the Companies Court?
I think I lean towards the latter. I attach an example of one that I recently issued against AXA insurance. Suffice to say they paid up jolly quickly".
The sums alleged to be due from the company fall into the following broad categories:
The details are set out in a four page schedule annexed to the petition.
| Description | Amount £ |
| Cost of repairs and replacement of defective items | 32,763 |
| Loss of charter hire | 47,727 |
| Mr Morgan's time (at £ 50 ph) | 7,825 |
| Solicitors' advice | 2,942 |
| Interest | 11,871 |
The claim for interest is, of course, contingent on establishing other heads of claim. The claims for loss of charter hire, Mr Morgan's time and the solicitors' advice separately raise issues of fact and law, but they too are at best claims for consequential loss, dependent on establishing liability for some or all of the alleged defects.
As recorded in paragraph 15 of the judgment, the grounds for the company's case that the claims were genuinely disputed on substantial grounds were, first, that it was entitled to rely on its standard terms and conditions which had the effect of excluding liability in the circumstances of the case and, secondly, that in any event the claims were disputed. The company accepted that in order to rely on its standard terms and conditions, it would have to establish that, for the purposes of the Unfair Contracts Terms Act 1977 ( UCTA), Tallington did not deal with the company as a consumer.
As recorded in paragraph 16 of the judgment, Tallington's position was, first, that the argument that it was not a consumer was not advanced either genuinely or on substantial grounds and, secondly, that the individual defences to the claim were not maintainable because liability had been admitted in correspondence.
The Judge dealt with the issue whether Tallington was a consumer in paragraphs 19–20, having referred to evidence on the issue in paragraph 4. He concluded that it was genuinely and substantially arguable that Tallington did not deal with the company as a consumer.
In paragraphs 21 and 24, the Judge dealt with the issue whether liability had been admitted or agreed and he concluded there were, at...
To continue reading
Request your trial
-
Ionut Cosmin Onea v Taiwo Ayoyunde Alegbe
...Ltd v Food Holdings Ltd [2008] UKPC 23 at [9], per Lord Hoffmann, and Tallington Lakes Ltd v Ancasta International Boat Sales Ltd [2012] EWCA Civ 1712, per David Richards J (as he then was) at [5]. Again, that is not a relevant consideration in the context of unfair prejudice 77 Mr Halban......
-
Wilson and Sharp Investments Ltd v Harbour View Developments Ltd
...debt is disputed, are well established. They were recently summarised by David Richards J in this court in Tallington Lakes Ltd and another v Ancasta International Boat Sales Ltd [2012] EWCA Civ 1712 at paragraphs 4–5: "4. There was no dispute before the Judge, nor has there been in this co......
-
The Companies Act (2021 Revision) and Green Dragon Gas Ltd
...and self-contained. The Findings of the Court 273 In Tallington Lakes Ltd and another v Ancasta International Boat Sales Ltd [2012] EWCA Civ 1712 Mr. Justice David Richards sitting in the English Court of Appeal states at paragraph 41: “41. The practical issue is the extent to which the co......
-
LDX International Group LLP v Misra Ventures Ltd
...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): “Th......