Key Facts
- •Appeal against two orders dismissing a winding-up petition and bankruptcy petitions.
- •Petitions related to Black Capital, allegedly a Ponzi scheme.
- •Appellants invested £18.3 million with Black Capital.
- •Dispute over whether Mr. Ubhi was a partner in Black Capital.
- •Dispute over whether the debt was liquidated.
- •Articles 7 and 8 of the Insolvent Partnerships Order 1994 (IPO) are relevant.
- •Appellants argued that the judge erred in her evaluation of evidence and misdirected herself on the application of Articles 7 and 8 of the IPO.
Legal Principles
Test for setting aside a statutory demand: 'substantial dispute' with a real prospect of success.
Rule 10.5(5)(b) of the Insolvency (England and Wales) Rules 2016; Collier v P & MJ Wright (Holdings) Ltd [2007] EWCA Civ 1329; Re Kerkar [2021] EWHC 3255; Ashworth v Newnote Ltd [2007] EWCA Civ 793
Summary judgment test: claim must have a 'realistic' prospect of success.
ED&F Man Liquid Products Ltd v Patel [2003] EWCA Civ 472; Re Kerkar [2021] EWHC 3255; Three Rivers DC v Bank of England (No.3) [2001] UKHL 16
Court can reject inherently implausible assertions in witness statements, but only in clear cases.
HRH Emere Godwin Bebe Okpabi v Royal Dutch Shell Plc [2021] 1 WLR 1294; ED & F Man Liquid Products Ltd v Patel [2003] CP Rep 51; Mentmore International Ltd v Abbey Healthcare (Festival) Ltd [2010] EWCA Civ 761
Appeal court will only interfere with lower court's findings of fact if there is an error of law, identifiable flaw, or unreasonable decision.
Re Sprintroom Ltd [2019] EWCA Civ 932; Assicurazioni Generali [2003] 1 WLR 577; Volpi v Volpi [2022] EWCA Civ 464; R(Z) v Hackney LBC [2019] EWCA Civ 1099
Definition of a liquidated sum: pre-ascertained or a specific amount ascertainable by a formula.
Dusoruth v Orca Finance UK Ltd [2022] EWHC 2346; McGuinness v Norwich and Peterborough Building Society [2011] EWCA Civ 1286; Blavo v Law Society [2018] EWCA Civ 2250; Truex v Toll [2009] EWHC 396 (Ch)
Outcomes
Appeal dismissed.
The judge's evaluation of the evidence was not flawed; she correctly applied the legal test and did not conduct a mini-trial. The judge was entitled to consider all evidence, including seemingly contradictory documents, in determining whether a substantial dispute existed regarding the partnership.
Ground in Respondent's Notice regarding liquidated sum upheld.
The MFAs did not create a liquidated debt for 90% of the investments because the amount due was not pre-ascertained or calculable by a formula; the 'risk' clause did not create a covenant to pay 90%.