Citigate Dewe Rogerson Ltd v Artaban Public Affairs SPRL [2009] EWHC 1689 (Ch)

Case No 168 of 2009[2009] EWHC 1689 (Ch)IN THE HIGH COURT OF JUSTICECHANCERY DIVISIONCourt 57Venue The Royal Courts of JusticeStrandLondonWC2A 2LLDate Tuesday, 30 th June 2009
Before
HIS HONOUR JUDGE HODGE QCsitting as a Judge of the High Court
B E T W E E N:
Between
CITIGATE DEWE ROGERSON LIMITEDApplicantARTABAN PUBLIC AFFAIRS SprlRespondent
Transcript from a recording by UbiqusCliffords Inn, Fetter Lane, London EC4A 1LDTel: 020 7269 0370
Mr DAVID PETERS (instructed by Vizards Wyeth) for applicantMr RICHARD BLAKELEY (instructed by Addleshaw Goddard) for respondent
JUDGMENTJUDGE HODGE QC:
[1]This is my extemporary judgment in the case of Citigate Dewe Rogerson Limited v Artaban Public Affairs Sprl, case number 168 of 2009. On or about 27th February 2009, the applicant, Citigate Dewe Rogerson Limited, received at its registered office a statutory demand from Artaban Public Affairs Sprl, the respondent. That statutory demand was dated 25th February 2009 and claimed a total sum in excess of 94,000 Euros as monies due and owing, the sterling equivalent of which is £83,997.85.[2]On 18th March 2009, the applicant issued an originating application seeking to restrain presentation of any winding-up petition founded on that statutory demand. The application is supported by two witness statements of Mr Paul Baker, the Chief Operating Officer of the applicant, both dated 18th March 2009. The application came on for hearing before Mr Justice Morgan on 19th March, and, upon the respondent undertaking not to present a winding-up petition pending the determination of the application at an adjourned hearing, the application was adjourned, and directions were given for the service of evidence in answer and in reply, the costs being reserved.[3]The evidence in answer takes the form of a witness statement from a director of the respondent, Monsieur Thierry Lebeaux, dated 9th April 2009. There is evidence in reply in the form of a third witness statement from Mr Paul Baker of 20th April 2009. The matter came back before the court on 2nd June 2009 before Mrs Justice Proudman, when she directed that the application was to proceed by way of an application by order, the hearing of which was to be expedited. It is that hearing that comes before me today.[4]The applicant is represented by Mr David Peters of counsel, and the respondent is represented by Mr Richard Blakeley of counsel. Both have submitted helpful written skeleton arguments, in each case dated 29th June 2009. Mr Peters for the applicant addressed me for some hour-and-a-half; Mr Blakeley addressed me in answer for another hour-and-a-half, spread over the short adjournment; and Mr Peters replied for some 45 minutes. Mr Blakeley then briefly addressed me on an additional authority that had been cited by Mr Peters in the course of his reply.[5]The background to the matter can be shortly stated. The applicant is an international consultancy which specialises in financial and corporate communications. On 4th June 2007, it entered into an agreement with a company which was described as a new company and in the event became the respondent. That consultancy agreement obliged the respondent to perform certain tasks in return for remuneration and payment of expenses by the applicant. The respondent’s main task was to set up and develop a public affairs operation for the applicant in Brussels. That agreement, dated 4th June 2007, was varied by a letter dated 2nd June 2008.[6]The subject matter of the statutory demand is a number of invoices which, in large part, were rendered, and referred to work and services performed, in the period after 2nd June 2008, although some of them do relate to earlier services performed by the respondent for the applicant. Essentially, the respondent was entitled under the terms of the consultancy agreement to fees for work done at a daily rate, up to an annual maximum. It was also entitled, upon production of proper receipts, to be reimbursed for all costs, save for ordinary direct costs reasonably incurred during the course of the assignment. Recoverable costs were to include travel, accommodation during travel, entertainment of clients, and other costs rechargeable to the clients. The consultancy agreement was expressed to be governed by Belgian law; and any dispute relating to it was to be subject to the jurisdiction of the Belgian courts.[7]In fact, as at the date of the statutory demand, there were proceedings pending in the Commercial Court of Nivelle in Belgium which had been initiated by the respondent. Essentially, the subject matter of those proceedings relates to the nature of the performance of the respondent’s consultancy services for the applicant and the applicant’s treatment of the respondent during the period of the consultancy agreement’s life. However, it is now common-ground between the parties that, within that larger dispute, there was included by the respondent a claim for the payment of all, or virtually all, of the sums forming the subject matter of the invoices which in turn form the subject matter of the statutory demand.[8]That is indeed apparent from the terms of the translation of the document filed in the Belgian court proceedings. There was a preliminary hearing in the Commercial Court of Nivelle on 19th February this year. There is in evidence, as part of exhibit PB2 to Mr Baker’s third witness statement, a letter from Claeys & Engels, the applicant’s Belgian lawyers, dated 20th April 2009. In that letter, they explain that, under Belgian law, an introductory hearing is in principle only aimed at agreeing on a judicial calendar for the exchange of the legal briefs, and at fixing a date for the pleadings. However, they note that, in very exceptional situations, the plaintiff may ask the court to render a judgment at an introductory hearing, based on Article 735 of the Judicial Code, provided, however, that(1) such demand has been made in writing in the Writ of Summons, and(2) the claim, or part thereof, can be heard in succinct proceedings.[9]The Belgian lawyers note that the Writ of Summons served by the respondent on 31st December 2008 required payment of outstanding invoices, but had not contained any reference to Article 735. That had been sought to be remedied by a letter of 10th February 2009, addressed to the applicant’s former Belgian lawyers. By letter dated 17th February 2009, the applicant’s present Belgian lawyers had contested that request based on the facts that the request had not been made in the Writ of Summons, as required by Article 735 of the Judicial Code, and that the invoices referred to in the respondent’s lawyer’s letter were disputed.[10]At the hearing, the lawyers record that the respondent’s counsel verbally asked the Court to order payment of unpaid invoices, based on the fact that these were allegedly indisputable, or at least not validly disputed by the applicant. That demand was contested at the hearing by the applicant’s Belgian lawyers. The President of the Court apparently asked the respondent’s counsel to identify the invoices that were, according to them, absolutely indisputable; and invoices for fees for the months of October, November and December 2008 were identified.[11]The Court indicated to the parties that it would deliver judgment on the same day, either granting or rejecting Artaban’s demand; and, according to the applicant’s Belgian lawyer’s letter, on that day the Court rendered a judgment whereby it stated that: ‘Considering however that it appears from developments raised during the introductory hearing, that the complexity of the matter requires further consideration’.[12]The lawyers comment that the Court had taken the view that the issue regarding the payment of the invoices was not of such a nature that it could be solved at the introductory hearing, but should, on the contrary, be subject to a discussion on the merits. In the same judgment, the Court then fixed a calendar for the exchange of the legal briefs and the date of the pleadings. The Belgian lawyers therefore concluded that it was not correct to say (as Monsieur Lebeaux had said in his witness statement in opposition to the present application) that the invoices that the respondent had sought payment of by way of the statutory demand were not the subject of the procedure initiated by the respondent against the applicant before the Commercial Court of Nivelle.[13]It is against that background that, some six days after the hearing at the Commercial Court in Nivelle, the statutory demand was issued in relation to which relief is now sought in these proceedings. For the applicant, Mr Peters essentially takes three points in support of his application for injunctive relief to restrain the presentation of any winding-up petition. First, he says that the Companies Court, under Council Regulation 44 of 2001, to which I shall refer as “the Regulation”, would, on the hearing of any petition based on the statutory demand, be obliged to decline jurisdiction in relation to the question of whether the sums claimed in the statutory demand were actually due to the respondent. It would inevitably, therefore, find itself in the position of being unable to make the winding-up order.[14]Secondly, it is said by Mr Peters that even if, contrary to the earlier submission, the Court were to conclude that the Regulation was inapplicable in the present case, any winding-up petition based on the debts set out in statutory demand would, by reason of the existence of proceedings in Belgium relating to those debts, amount to an abuse of process. Thirdly, it is said that the debts identified in the statutory demand are, in any event, bona fide disputed on substantial grounds.[15]Before turning to those submissions, it is relevant to set out the statutory and case-law background to insolvency proceedings founded upon a debt, and also to applications to restrain presentation of a winding-up petition based on an alleged debt. The statutory jurisdiction is of course conferred by the Insolvency Act 1986. Section 122, sub-section 1(f), provides that one of the circumstances in which a company may be wound up by the Court is if it is unable to pay its debts. A company is, by Section 123, sub-section 1(a), deemed unable to pay its debts if a creditor, to whom the company is indebted in a sum exceeding £750 then due, has served on the company, by leaving it at the company’s registered office, a written demand (in the prescribed form) requiring the company to pay the sum so due; and the company has for three weeks thereafter neglected to pay the sum, or to secure or compound for it to the reasonable satisfaction of the creditor. By Section 124, sub-section one, subject to the provisions of that section, an application to the court for the winding-up of a company should be by petition, presented by (amongst others) any creditor or creditors.[16]The jurisdiction to restrain presentation of a winding-up petition has been considered in a number of cases. I was taken to three authorities. First to the test set out by Mr Justice Ferris in the case of Re Company (No 003079 of 1990)[1991] BCC 683 and, in particular, to the passage at 684 letter D through to 685 letter E. In the course of his judgment, Mr Justice Ferris referred to the earlier pronouncement of Lord Justice Buckley in the case of Stonegate Securities Ltd v Gregory [1980] 1 Ch 576 at 579 to 580. Mr Justice Ferris commented that it was well established that if an application was made to the court to restrain the presentation of a petition, on the ground that the creditor’s debt was disputed, the Court would grant the restraint asked for if it was satisfied that the debt was disputed on substantial and bona fide grounds.[17]That was an approach endorsed by Mr David Donaldson QC, sitting as a Deputy Judge of the Chancery Division, in the case of in Re Company (No 0160 of 2004) [2004] EWHC 380 (Ch). I was taken to paragraphs 21 through to 29 of his judgment. At paragraphs 24 and following, the Deputy Judge said this:
‘In considering the rival submissions before me, I proceed from first principles. Any claimant or petitioner must be permitted to proceed with his claim or petition unless he has no real prospect of success in obtaining the relief sought by the claimant petitioner. That I take to be equivalent to the inevitable failure of which Ferris J spoke. A petition to wind up a company will fail if the court hearing the petition concludes that the company has a substantial defence to the creditor’s claim, i.e. would have a real prospect of defeating that claim, for in such a case it is entitled to have that substantial dispute resolved in ordinary proceedings. Accordingly, the court hearing an application preventing the petition being heard at all has to decide whether there is a real prospect that the winding-up judge may conclude that the company has no such substantial defence. Only where the earlier judge considers that there is no such real prospect of the hearing of the petition were to go ahead - I think that should read, ‘if the hearing of the petition were to go ahead’ - would it be right to kill the petition at the outset by the granting of an injunction. It seems to me that the formulation of Ferris J is merely a concise expression of this reasoning from first principles and I respectfully adopt and follow it. Nor do I consider that Hoffmann J - that is a reference to another case, Re Company (No 0012209 of 1991)[1992] 1 WLR 354 - was saying anything inconsistent. He had, in the case before him, plainly formed the view that the proposed petition was inevitably bound to fail because the company had satisfied him that there was a rationally arguable defence. What is not correct, in my view, is the obverse: that the first judge, if he intends to refuse an injunction, must first find and declare that the company does not have a properly triable defence. If that were correct, it would appear by issue estoppel to determine the very question at the heart of the petition and reduce its subsequent hearing in most cases to a formality. I therefore have considered the evidence in the light of the Ferris formula, whether I regard the petition as bound to fail: in other words whether the respondent has no real prospect of persuading the winding up court that the company has no properly arguable defence to the respondent’s claim.’
[18]That is the test that Mr Blakeley for the respondent invites me to adopt and apply: whether the respondent has no real prospect of persuading the winding-up court that the company has no properly arguable defence to the respondent’s claim.[19]For the applicant, Mr Peters invites me to approach the matter from a broader position. He has taken me to the case of Coulon Sanderson & Ward Ltd v Ward [1986] 2BCC 99, 207 and, in particular, to a passage in the judgment of Slade LJ at page 9 of the printed transcript placed before me. He distils from that passage the following test: Has the applicant sufficiently established, prima facie, that the plaintiff company will succeed in establishing that the proceedings sought to be restrained would constitute an abuse of process? That is the background against which I approach this application.[20]As I have indicated, Mr Peters has made three broad submissions. The first concerns the applicability of the Regulation. Mr Peters accepts that the Regulation expressly provides, by Article 1.2(b), that the Regulation does not apply to proceedings relating to the winding-up of insolvent companies. On the face of it, he acknowledges that that exclusion would appear to negate the possibility of the applicant relying on the Regulation. But he submits that the European Court of Justice has given the exclusion contained in Article 1.2(b) an extremely narrow construction. He has taken me to the decision in the case of Gourdain v Nadler [1979] ECR 733 and, in particular, to the gist of the European Court’s decision, which is to be found at paragraph 4. There, the test laid down by the European Court (in relation to the text of an earlier Convention) was that it was necessary, if decisions relating to bankruptcy and winding-up were to be excluded from the scope of the Convention, that they must derive directly from the bankruptcy or winding-up and be closely connected with the proceedings for the ‘liquidation des biens’ or the ‘reglement judiciaire’. The actual decision was that an application under French insolvency legislation to make good a deficiency in the assets of an insolvent company in liquidation was one that fell within the scope of the area excluded from the regulation by Article 1.2(b).[21]That decision was subsequently applied by Rimer J, sitting in the Chancery Division, in the later case of UBS AG v Omni Holdings AG (In Liquidation) [2000] I WLR 916. The dispute in that case concerned a Swiss provisional liquidator’s treatment of what was, in effect, a proof of debt submitted to it by the claimant. It was held that that dispute did not fall within the Article 1.2(b) exception. The Judge accepted that the issues raised by the claim concerned the proper construction of the contractual documentation which had given rise to the relevant disputed debt. At page 923 between letters E and G the judge said this: ‘The substance of UBS’s case is that it is claiming that, upon the true construction of its (and its assignor’s) pre-liquidation relationship with Omni, the indebtedness for which it is entitled to prove in the liquidation is greater than Omni’s liquidators have so far being prepared to accept. A claim of that nature is not, in my view, one which derives directly from Omni’s winding-up. It is one which was capable of arising quite apart from any such winding-up. Omni’s insolvency now requires the question to be determined. But it is not one which derives directly from the insolvency. It derives from the dispute between Omni and UBS as to the latter’s rights under the pre-liquidation transactions in which they engaged’.[22]In other words, Mr Peters submits that Rimer J was holding that, in order for the Article 1.2(b) exception to apply, the relevant claim has to derive directly from the relevant winding-up. Mr Peters acknowledges that those decisions both directly concerned an earlier Convention; but he submits that they apply also to Article 1.2(b) of the Regulation because it is in all material respects identical to the provisions which were being discussed in the earlier authorities; and, in the recent decision of the European Court in the case of Seagon v Deko Marty Belgium NV [2009] BCC 347, the European Court has confirmed that the Gourdain case remains good law, and is of direct assistance when deciding whether a case falls within the Regulation.[23]On this basis, Mr Peters submits that the Regulation would apply to the determination of any winding-up petition founded upon the invoices. In particular, he submits, first, that the court will be required to determine whether or not the applicant was liable to pay the invoices. Given that the applicant is otherwise solvent, that is the sole question of substance which the court would have to determine on the hearing of any winding-up petition. He submits that that question has no connection whatsoever to the winding-up of the applicant, but is a straightforward question as to the party’s contractual rights and obligations which fall to be governed in accordance with Belgian law, and to be decided in the proceedings which are pending, at the respondent’s own initiative, in the Belgian courts. He also submits that the question of whether the applicant is liable to pay the invoices is, by definition, anterior to any winding-up of the applicant, and so cannot sensibly be said to derive from the winding-up.[24]The sole question here, he says, is whether the debt can be proved. The question in substance is one of legal process, rather than of form. Here, it is the nature of the civil law right that is in dispute; there is no insolvency issue as such. He therefore submits that the Court, in determining the present application, has to consider the effects of the Regulation and, in particular, Articles 27 and 28, on any winding-up petition founded on the invoices.[25]That submission is disputed by Mr Blakeley for the respondent. He submits that it is clear that a matter is not one of insolvency if the question only arises incidentally. But, conversely, he submits that matters deriving solely from the insolvency law regime of individual Member States fall within the Article 1.2(b) exclusion from the Regulation. He submits that the respondent’s presentation of a winding-up petition self-evidently falls within the exception relating to the winding-up of a company. He says this because the cause of action derives solely from the alleged insolvency of the company. The respondent’s cause of action is aimed at the winding-up of an insolvent company, and is brought to invoke the court’s power to do so. He says that it is a cause of action which does not exist independently of the alleged insolvency; and, quite simply, he says it is very difficult to see how it could be said that the presentation of a winding-up petition does not relate to the winding-up of the company. Indeed, he goes so far as to say that the construction of the exception to the Regulation for which the applicant contends is incredibly narrow, and goes far beyond the boundaries established by either European or English authority. In effect, what the applicant is doing, he submits, is attempting to bring the proceedings into the Regulation by arguing that the existence of a preliminary or anterior question as to whether or not the applicant’s debts are genuinely and substantially disputed renders the proceedings within the Regulation. That, he says, is incorrect.[26]The applicant’s approach, he submits, is therefore contrary to authority and should be rejected. The proceedings are outside the Regulation; and the court hearing any winding-up petition presented by the respondent will have substantive jurisdiction to do so.[27]I prefer the respondent’s submissions on this point. I reject the applicant’s argument that this case falls within the Regulation at all. In my judgment, it clearly falls within the Article 1.2(b) exclusion. It is important to bear in mind that the authorities upon which Mr Peters relies were concerned with post-liquidation legal processes. Here, the question is whether the respondent is entitled to invoke the insolvency jurisdiction of the court having jurisdiction in the area where the applicant’s registered office is situated, and its centre of main interest is apparently located. In my judgment, for the reasons given by Mr Blakeley, that clearly falls within the scope of the Article 1.2(b) exception because the Regulation expressly does not apply to proceedings relating to the winding-up of insolvent companies.[28]The observations in the Gourdain v Nadler case and in the UBS v Omni Holdings case were directed specifically to the situation where the relevant company had already been wound up, and a winding-up was therefore already in progress. The Court was concerned to identify the extent to which the Article 1.2(b) exclusion applied to post-liquidation legal processes. That is not the situation here. Here, the respondent seeks to petition to wind-up the company; and therefore the situation falls four-square within the Article 1.2(b) exclusion. I should add, although in the light of that decision it does not fall to be decided, that, had I taken the view that the Regulation applied, I would not have accepted Mr Peters’s submission that the case fell within the scope of Article 27 of the Regulation. That provides that where proceedings involving the same cause of action and between the same parties have been brought in the courts of different Member States, any court other than the court first seised shall of its own motion stay its proceedings until such time as the jurisdiction of the court first seised is established.[29]I acknowledge here that the present contemplated winding-up proceedings and the existing Belgian proceedings are between the same parties. I acknowledge that they are brought in the courts of different Member States. I accept that the court first seised is the Belgian court. However, it does not seem to me that they involve the same cause of action.[30]The proceedings in Belgium are essentially a private law dispute between two contracting parties which include, as part of the relief sought, recovery of sums included within the invoices which form the subject matter of the disputed statutory demand. The proposed winding-up proceedings in this country would involve the invocation of a class remedy for the benefit of all creditors of the applicant company. They would not be directed, in form at least, to the simple recovery of a contract debt. They would, as I say, involve the invocation of a class remedy for the benefit of all creditors; they would result in the making of the usual compulsory winding-up order, not in a money judgment in favour of an individual litigant, namely the respondent. But it is unnecessary for me to consider that aspect of the matter further, just as it is unnecessary for me to consider the potential application of Article 28, since on the view that I take the case falls outside the scope of the Regulation.[31]I turn then to the second limb of Mr Peters’s submission. That is the abuse of process argument. Mr Peters submits that the Court should restrain the presentation of the winding-up petition where the alleged debtor, in this case the applicant, is able to establish a prima-facia case that such presentation would amount to an abuse of process. He submits that it is an abuse of process for a party to seek to pursue winding-up proceedings in England in respect of debts which are the subject matter of unresolved substantive proceedings in another Regulation state. He acknowledges that there does not appear to be any authority which expressly supports, or indeed contradicts, that proposition; but he submits that it is clearly correct in principle for a number of reasons, which he sets out in paragraph 22 of his written skeleton argument.[32]In summary, he submits that it cannot be right for the respondent to sue, quite properly, in Belgium and, whilst those proceedings are on foot and unresolved, to seek to wind-up the company on the basis of the invoices which form part of the subject matter of its claim in the Belgian proceedings. He submits that to allow that would outflank the jurisdiction clause in the party’s consultancy agreement, and would pre-empt the function and decision of the Belgian court.[33]He submits that if the respondent is able to persuade the Belgian courts that, as a matter of Beligan law, being the proper law of the relevant debt, an order for payment ought to be made against the applicant, then such an order would, as a matter of course, be recognised and enforced in England; and could then, and at that stage, but at that stage only, properly form the basis of a winding-up petition. It is the applicant’s position that it would be willing and able to comply with any such order. However, he submits that, unless and until such an order is made in the Belgian proceedings, it would be highly inappropriate for the English court to make an order based on the assumption that the applicant was unquestionably liable to pay the invoices, or any of them.[34]For the respondent, Mr Blakeley submits that any argument that the respondent is seeking in any way to usurp the jurisdiction of the Belgian court is unfounded. He makes the point that there is no prospect of any double recovery because, to the extent that the invoices are ever paid, they will cease to form part of the Belgian proceedings, and will cease to be claimed there. He makes the point that there has been no relevant judgment to date in the Belgian court. He submits also that the Court should require compelling reasons before preventing a party from pursuing a remedy which is otherwise available to it. The Belgian proceedings have not yet reached any decision on the merits; and it would be no violation or intrusion on the sovereignty of the Belgian court for the Companies Court in this country to take the view that some, or all, of the invoices are unquestionably due to the respondent. He invites the court to pose the question whether a Belgian court would be likely to feel any affront were this Court to make such an assessment; and his answer is clearly that it would not.[35]In my judgment, the answer to the pure abuse of process argument advanced by Mr Peters - and by that I divorce it from the dispute as to the bona fides of the invoices themselves - is really determined by my earlier decision on the scope of the exclusion in Article 1.2(b) of the Regulation. I have already decided that the appropriate, and only appropriate, forum for winding-up proceedings in relation to the company is the Companies Court in this jurisdiction. In those circumstances, it does not seem to me that it can constitute an abuse of the process, absent any bona fide dispute as to the validity of the invoices, for the respondent to invoke the winding-up jurisdiction of the Companies Court here. I simply cannot see that it is an abuse of the process for the respondent, if otherwise entitled, to invoke the class remedy inherent in the jurisdiction to wind-up a company registered in England and Wales.[36]If Mr Peters’s abuse of process argument is to succeed at all, it has to be on the traditional, and well-established, ground that there is a bona fide and substantial dispute as to the invoices on which the statutory demand is founded. Mr Peters has made the point that the agreement upon which those invoices are founded is governed by Belgian law; but there is at this stage no evidence of Belgian law before the Court. Moreover, Belgian law would only govern the question whether, as a matter of the true meaning and effect of the consultancy agreement, an entitlement to the invoice sums has arisen. It would not affect the exercise by the court of its winding-up jurisdiction in any wider sense. That falls to be determined by reference to the applicable provisions of the Insolvency Act.[37]The relevance of Belgian law is only as to the question whether there is a bona fide and substantial dispute as to the respondent’s entitlement to the invoiced sums. In the absence before this Court - and the position may, as Mr Blakeley acknowledges, be different before the court exercising its jurisdiction on any winding-up petition; but in the absence of any evidence of Belgian law, the court proceeds on the footing that it is no different from the law of this country.[38]Mr Peters’s submissions in his written skeleton on the issue of the existence of a bona fide dispute on substantial grounds occupied a very small section, paragraph 29, of his written skeleton argument. Whilst acknowledging that there is more detail in Mr Baker’s three witness statements, Mr Peters emphasises the factual position in relation to the invoices, which he says is as follows: first, that the trust between the parties has broken down completely; secondly, and more specifically, that the applicant has serious and legitimate concerns as to the honesty and accuracy of the respondent’s billing, and so disputes the invoices; and, thirdly, he emphasises that, unfortunately, the amount of work done and/or the expenses incurred by the respondent, if any, is something which is necessarily outside the applicant’s knowledge. It is therefore impossible for the applicant to assess whether, and to what extent, there is any undisputed balance due to the respondent. That lack of knowledge is said to flow naturally from the parties’ commercial relationship; it is not something for which the applicant can be criticised, or of which the respondent ought to be permitted to take advantage. Fourthly, it is said that, in these circumstances, it is legitimate - and it is said that the Belgian court has accepted that it is legitimate - for the applicant to require the respondent to prove at trial that it is entitled to the sums set out in the invoices; and, fifthly, and finally, it is said, by reference to paragraph 17 of Mr Baker’s third witness statement, that the applicant alleges that the respondent is guilty of a variety of wrongful conduct which may, in due course, give rise to a claim for an indemnity by the applicant in the Belgian proceedings.[39]He therefore submits that, quite aside from the jurisdictional questions which I have resolved against him, the relevant debt is plainly disputed on bona fide and substantial grounds. That is disputed by Mr Blakeley for the respondent. He submits that there are at least a number of invoices which are not genuinely and substantially disputed, and which may legitimately form the basis of a winding-up petition. He submits that the applicant’s refusal to pay those sums, and this application, form part of a campaign directed against the respondent which amounts to an oppressive attempt to keep the respondent out of funds for as long as possible, in the hope that the respondent’s claim in Belgium will thereby be stifled.[40]Mr Blakeley addresses a number of the invoices at paragraph 22 of his written skeleton argument; and he submits that in the light of what he there says, it is clear that there is a real prospect that a judge hearing a winding-up petition would conclude that Citigate, the applicant, has no defence to a number of the invoices claimed. In particular, he relies upon seven invoices, or groups of invoices; although, in the light of certain documents produced this morning by the applicant, he has abandoned reliance on invoice 0808, described at paragraph 22. 5. In relation to that invoice, Mr Blakeley accepts that there is a dispute. Mr Peters seizes on that; he says that no explanation has been provided for the discrepant invoice numbers. He submits that that gives rise to an inference of a potential tampering with invoices, and gives rise to a legitimate concern as to the reliability and accuracy of other invoices. Without expressing himself in those terms, his submission in that regard seems to me to amount to this: that it was the 13th stroke of the clock that casts doubt on all that has gone before.[41]Mr Peters also raises questions as to whether certain of the invoices on which Mr Blakeley relies actually fall within the entitlement within the consultancy agreement to raise invoices in respect of expenses. He took me to the section of the agreement, within exhibit PB1 to Mr Baker’s first witness statement, relating to costs and IT equipment and offices, at page 4. He pointed to the fact that the fee includes the ordinary direct costs reasonably occurred - that should read, ‘incurred’ - during the completion of the assignment, whilst all other costs, such as travel, accommodation during travel, entertainment of clients and other costs rechargeable to clients, are to be reimbursed on the production of receipts, and may be subject to prior approval by the company. In relation to IT equipment and offices, it is expressly provided that the consultant will be responsible for its own IT equipment required for the performance of its assignment; it will also be responsible for its own offices.[42]On that footing, Mr Peters, in the course of his reply, questioned the respondent’s entitlement to submit invoices for cleaning services, for lavatory towels, and for telephone charges (items 2, 3 and 4 within paragraph 22 of Mr Blakeley’s written skeleton argument). I am prepared to accept that there may be some dispute in that regard. Nevertheless, making full allowance for that, it does seem to me that there are serious questions raised by the other invoices identified by Mr Blakeley in paragraph 22 of his skeleton and, in particular, those identified at sub-paragraphs 1,6 and 7.[43]I have to look to the test identified by Mr Donaldson in the 2004 case and ask myself whether, having considered all of the evidence, and borne in mind all of Mr Peters’s points, I regard the petition as bound to fail. In other words, if I ask whether the respondent has no real prospect of persuading the winding up court that the company has no properly arguable defence to the respondent’s claim, I answer the question in this sense: I do not regard the petition as bound to fail. I do not consider that the respondent has no real prospect of persuading the winding-up court that the company has no properly arguable defence to the respondent’s claim.[44]In my judgment, there is a real prospect that, at the hearing of any winding-up petition founded on those invoices which I have identified, and which are referred to at paragraphs 22.1, 22.6 and 22.7 of Mr Blakeley’s skeleton argument, the Court may well conclude that there is a debt properly payable to the respondent. In those circumstances, it would be wrong for me to accede to the application to restrain the respondent from presenting a winding-up petition founded on the statutory demand. I therefore propose to dismiss the application. Yes? MR BLAKELEY: Your Honour, I am grateful, the respondent will of course be asking for its costs. JUDGE HODGE: Yes, I have not received any… MR BLAKELEY: There is no schedule of costs served yet. There is one from the applicant and I am happy to inform you that the respondent’s will be around 20% approximately of the value. JUDGE HODGE: Well yes, but what I had in mind was that, at paragraph 27 of your skeleton, you said the respondent requests its costs of this application “to be summarily assessed”. MR BLAKELEY: Well, My Lord, that was my intention but having received nothing from those instructing me I am afraid I am unable to apply for summary assessment of my costs. JUDGE HODGE: Right. So you just want costs to be subject to detailed assessment if not agreed? MR BLAKELEY: If not agreed. JUDGE HODGE: I am wondering whether… Well if that is what you are asking for, that is what you are asking for. MR BLAKELEY: Well, is Your Lordship considering interim payment on account of those costs? JUDGE HODGE: Well I was not actually; what I was considering was saying that you could come back at 10.30 one morning, or 10.15 one morning, this week to ask me summarily to assess them, but I think the… MR BLAKELEY: Well given the level of the costs it would be hoped that they could be agreed between the parties. JUDGE HODGE: Well there has not been much agreement so far. Right well— MR BLAKELEY: I’m open to that course of action. JUDGE HODGE: Well what I will do then is simply dismiss the application and order the applicant to pay the respondent’s costs, to be the subject of a detailed assessment if not agreed. MR BLAKELEY: Well I’m grateful.

Cited in 1 later judgment