Key Facts
- •IPS Law LLP (IPS) sought to restrain Safe Harbour Equity Distressed Debt Fund 3 LP (Respondent) from advertising a winding-up petition.
- •The petition debt was £500,000, stemming from a loan made under a facility agreement.
- •IPS contested the petition on grounds of assurances that the agreement wouldn't be enforced (promissory estoppel, estoppel by convention, collateral contract) and crossclaims exceeding the debt.
- •IPS claimed entitlement to a share of damages from 'Project Red Card' (Personal Data Claims) and alleged the Respondent induced a breach of contract, interfered with a solicitor's lien, and breached confidence.
- •No Personal Data Claims had been issued at the time of the hearing.
- •IPS's arguments were raised late in the proceedings.
Legal Principles
The court will restrain advertisement of a winding-up petition where the debt is disputed on genuine and substantial grounds.
Angel Group Ltd v British Gas Trading Ltd [2012] EWHC 2702 (Ch) at [22]
A dispute is not 'substantial' if it has no rational prospect of success.
Re A Company No.0012209 [1992] 1WLR 351 at 354B
The court considers evidence in detail to determine if a genuine dispute exists, similar to a summary judgment application.
Re A Company No.006685 [1997] BCC 830 at 837B
The court considers the reliability of evidence to judge whether a substantial allegation is made, not just a series of hopeless allegations.
Portsmouth v Alldays Franchising Ltd [2005] EWHC 1006 (Ch) at [12]
Extensive and complex evidence should not mask the absence of an arguable defence.
Re Richbell Strategic Holdings Ltd [1997] 2 BCLC 429
Promissory estoppel requires a clear and unequivocal promise, intended to affect legal relations, acted upon by the other party to their detriment.
Snell’s Equity, 34th edition at §12-018 and Harvey v Dunbar Assets plc [2017] EWCA Civ 60
Estoppel by convention requires parties acting on a common assumption of facts or law.
Republic of India v India Steamship Co Ltd [1998] AC 878
A collateral contract requires a statement intended to have contractual effect, inducing entry into the main contract.
Hughes v Pendragon Sabre Ltd [2016] EWCA Civ 18
Insolvency proceedings may be an abuse of process if the petitioner's aim is not genuine liquidation or acts outside the class interest of creditors.
Maud v Aabar Block SarL [2015] EWHC 1626 (Ch)
Outcomes
The application to restrain advertisement of the winding-up petition was dismissed.
IPS's grounds of opposition were not substantial and lacked a rational prospect of success. The alleged assurances were not unequivocal, and the crossclaims lacked merit due to the absence of a binding contract entitling IPS to a share of 'Project Red Card' damages.