Elevate Estates Management Ltd v Fine Star Ltd [2026] EWHC 1831 (Ch)

[2026] EWHC 1831 (Ch)Case No CR-2026-004880IN THE HIGH COURT OF JUSTICEBUSINESS AND PROPERTY COURTS OF ENGLAND AND WALESINSOLVENCY & COMPANIES LIST (ChD)Neutral Citation:Venue 7 Rolls Building, Fetter LaneLondonDate 13 July 2026Before: CHIEF ICC JUDGE BRIGGSIN THE MATTER OFELEVATE ESTATES MANAGEMENT LTDApplicant- v -FINE STAR LTDRespondentMS CAROLINE ROBERTS-WATERWORTH appeared on behalf of the ApplicantMR MARTIN OUWEHAND appeared on behalf of the RespondentJUDGMENT13 July 2026WARNING: Reporting restrictions may apply to the contents transcribed in this document, particularly if the case concerned a sexual offence or involved a child. Reporting restrictions prohibit the publication of the applicable information to the public or any section of the public, in writing, in a broadcast or by means of the internet, including social media. Anyone who receives a copy of this transcript is responsible in law for making sure that applicable restrictions are not breached. A person who breaches a reporting restriction is liable to a fine and/or imprisonment. For guidance on whether reporting restrictions apply, and to what information, ask at the court office or take legal advice.This Transcript is Crown Copyright. It may not be reproduced in whole or in part other than in accordance with relevant licence or with the express consent of the Authority. All rights are reserved.CHIEF ICC JUDGE BRIGGS:Introduction
Between
Elevate Estates Management LtdClaimantFine Star LtdDefendant
[1]This judgment concerns two applications made by Elevate Estates Management Ltd (“Elevate”):(i) an application for a validation order under section 127 of the Insolvency Act 1986; and(ii) an application to restrain advertisement of a winding-up petition presented on 23 June 2026 by Fine Star Estates Ltd (“Fine Star”).[2]Fine Star opposes both applications. It also seeks permission to rely upon certain evidence filed by Elevate in earlier insolvency proceedings brought by Vatry Estates Ltd (CR-2026-004433). I have considered the evidence, including the second witness statement of Mr Naftoli Stern dated 10 July 2026.

Factual Background

[3]Fine Star is landlord under 51 leases granted to Elevate between April 2025 and February 2026. Elevate sublets and manages the properties and is obliged to pay fixed monthly rent irrespective of its own receipts. It is submitted that the company has undergone exponential growth and that this is the reason why there are few documents to support its position. It argues that it is solvent.[4]Mr Brown of Elevate says:
“The Company was incorporated on 24 January 2024 and carries on business as a residential property management company, in which it enters into leases with landlords, and thereafter grants tenancy agreements to sub-tenants, often introduced by local authorities. The Company has a present property portfolio of c.100 properties.”
[5]As at presentation of the petition, rent arrears stood at £836,557.23. Fine Star’s evidence is that arrears had increased to £1,120,586.87 by 7 July 2026. Elevate has not produced any coherent evidence contradicting those figures.[6]Rent payments to Fine Star largely ceased in May 2026. Only one payment was made after 8 May 2026, and no rent was paid in June 2026 for any of the active leases.[7]Elevate asserts that Fine Star has failed to give proper credit for payments totalling £1.76 million. Specifically Mr Brown states at paragraph 9 of his second statement:
“The Petitioner has failed to give proper credit for these payments, and I do not accept that the alleged Debt is properly calculated or due in the sum claimed, or at all”
. He submits that no schedule has been produced identifying any specific payment omitted from Fine Star’s ledgers. Fine Star’s evidence that all payments have been credited, save for one mistaken £4,000 payment, stands unchallenged.[8]Elevate further asserts a cross-claim of £334,376.23 in respect of alleged repair invoices. The documents exhibited are internal printouts. There is no evidence that the works were carried out, that Fine Star agreed to pay for them, that Elevate incurred liability for them, or that any invoices were sent or chased. Prior to these proceedings, Elevate referred only to unpaid repair invoices totalling about £17,938. Mr Brown sums up Elevate’s position as follows:
“The Company's position is that the alleged debt is genuinely disputed on substantial grounds.”
[9]Mr Stern’s first witness statement details the agreement between Elevate and Fine Star that Elevate will pay the rent under the leases (there are 51) without abatement, set-off or deduction (clause 9.1) and clause 32 places the responsibility on Elevate to keep the premises in good condition. It may be that this clause is the reason why there is a lack of evidence of any cross-claim, as the obligation on Fine Star is only in respect of structural repairs that have not been caused by Elevate (clause 33).[10]In his second witness statement Mr Stern demonstrates that the only contemporaneous maintenance discussions concerned invoices in the region of £15,000–£20,000, consistent with the sum of approximately £17,938 already identified in his first statement. None of the correspondence relates to the substantial refurbishment works now alleged. Mr Brown has accepted that the invoice numbers in his schedule were incorrect but has not provided corrected invoices. Mr Stern states that payments for rent ceased on 8 May 2026 (or effectively ceased, as one further part payment was made after that date). Mr Stern lists supporting creditors amounting to approximately £280,000. Elevate does not state that it disputes those sums.[11]Mr Brown alleges that Fine Star approached tenants and requested them to stop paying Elevate. Mr Stern denies this and exhibits an email dated 20 May 2026 in which he expressly refuted the allegation. Elevate did not pursue the matter further.[12]Elevate’s trading premises have been repossessed by its landlord. Photographs exhibited by Mr Stern show forfeiture notices dated 15 June 2026. That strongly suggests arrears had accrued well before that date.[13]Elevate’s financial evidence is inconsistent. A cash-flow projection estimated a closing balance of £470,935 as at 31 May 2026, whereas the bank statement shows an actual balance of about £51,000. Elevate has not explained that discrepancy or the nature of substantial payments to Mr Brown and connected parties.[14]Mr Stern summarises the position in the following way at the end of his second statement:a. The petition debt has risen from £836,557.23 at the date of presentation (23 June 2026) to £1,120,586.87. There is no genuine dispute as to the petition debt.b. Any repairs for which the landlord is responsible are de minimis in value compared to the petition debt (approximately £17,938).c. 148 invoices have been raised since the petition in favour of Elevate, but they are unsubstantiated.d. In any event the rent is payable without set-off; ande. Even if the invoices are correct and set-off is permitted, the balance in favour of Fine Star is between £500,000 and £750,000. There is no substantial dispute.

Legal Principles

[12]The Court will restrain advertisement of a winding-up petition only if the Company demonstrates a genuine and substantial dispute as to the petition debt or a genuine and substantial cross-claim: Angel Group Ltd v British Gas Trading Ltd [2012] EWHC 2702 (Ch). The task is for the court to identify whether the petitioning creditor has standing to petition and whether the debt is sufficient to wind up the debtor company.[13]As regards a genuine and substantial dispute, the courts have made it clear that mere assertion is insufficient. The debtor must adduce credible evidence: Coilcolor Ltd v Camtrex Ltd [2015] EWHC 3202 (Ch). Although this case concerns an application for an injunction restraining presentation of a petition, Elevate seeks to rely on it as a recitation of general principle. The power of the Court to restrain the presentation of a petition flows from the jurisdiction to prevent an abuse of process where there is no room for discretion: Angel Group Ltd; Re A Company (No.007923 of 1994) [1995] B.C.C. 634 at 637, 639. On the other hand, restraining notice involves a degree of discretion where the jurisdiction will be exercised with circumspection in circumstances where a petition has been validly presented.[14]In Coilcolor Hildyard J confirmed:(1) The court will prevent presentation of a winding up petition where it considers that the petition would be an abuse of process and/or that the petition is bound to fail (to the extent that they are different).(2) The practice that the Companies Court will not usually permit a petition to proceed if it relates to a disputed debt does not mean that the mere assertion in good faith of a dispute or cross-claim in excess of any undisputed amounts will suffice. As put by Hildyard J at [35]: ‘The court must be persuaded that there is substance in the dispute and in the Company’s refusal to pay: a “cloud of objections” contrived to justify factual enquiry and suggest that in all fairness cross examination is necessary will not do’.[15]In argument my attention was also drawn to Tallington Lakes v South Kesteven District Council [2012] EWCA Civ 443, which is often cited to argue that the threshold test for a restraining order is lower than that applied to summary judgment. Etherton LJ said: “it is well established that the threshold for establishing that a debt is disputed on substantial grounds in the context of a winding up petition is not a high one for restraining the presentation of the winding up petition, and may be reached even if, on an application for summary judgment, the defence could be regarded as ‘shadowy’”.[16]In so far as Tallington Lakes is relevant to restraining notice or advertisement, I do not read Etherton LJ as saying that a restraining order would be made if the defence is “shadowy”. The term “shadowy” is famously imprecise so that one may say “one knows it when one sees it”. It must be appreciated that although the decision is one of the Court of Appeal, there was no representation from the respondent; Etherton LJ sat alone; and the decision was made on an oral renewal application for permission to appeal. It should not be lost on practitioners that the judgment is prohibited from being cited under two of the grounds provided by paragraph 6.2 of the Practice Direction (Citation of Authorities) [2001] 1 WLR 1001.[17]Given the prohibition there is little need to spend too much time on Tallington Lakes for the purpose of this case. However, as it is often cited to this court it may be worth stating that it is unlikely that Etherton LJ intended to change 100 years or so of authority. In Buckley on the Companies Acts, 11th ed. (1930), pp. 356-357 the authors emphasised that a debt needed to be disputed on substantial grounds. The terms “substantial” and “shadowy” are clearly different. The term “substantial” demands that the arguments possess weight, something that can bear scrutiny. The test would require a case to survive being probed and turned over. On the other hand, “shadowy” works in the opposite register. It has visible form but carries little or no weight or mass. It may shift or vanish if exposed to scrutiny. In my judgment Etherton LJ was merely stating that the court will have regard to all the circumstances but not to conduct a mini trial on the merits.[18]An example of the interplay between summary judgment and the Companies Court test can be seen in Re Welsh Brick Industries Ltd [1946] 2 All ER 197. It concerned a claim where the creditor sought recovery of a debt. There was an application for summary judgment. The district judge had given the company unconditional leave to defend on the basis of a contention that the debt was bona fide disputed, because it had been agreed that the money was not repayable until the company was in a financial position to pay it. The creditor subsequently presented a winding-up petition in the county court. The county court judge found that the debt was owing and consequently that the company could not pay its debts and made the winding-up order. His decision was affirmed by the Court of Appeal and reaffirmed in Re Taylor’s Industrial Flooring Ltd [1990] BCC 44.[19]Further, in the well-known decision in Re a Company (No 00685 of 1996) [1997] BCC 830 at 835, Chadwick J explained the well-established line of authority: ‘the general rule under which this court refuses to entertain a petition founded on a disputed debt applies only where the dispute is a genuine dispute founded on substantial grounds; and does not preclude this court from determining - or entitle this court to decline to determine - the question of whether or not there are substantial grounds for dispute. Indeed, in the passage from the judgment of Oliver LJ to which I have just referred, he pointed out that the court necessarily has to take a view whether on the evidence there really is substance in the dispute which is raised by the alleged debtor’.[20]In any event the court is unlikely to grant an injunction on the basis of unsubstantiated and imprecise assertions; applicants must provide sufficiently precise factual evidence.[21]This application may only be understood from the evidence Elevate brings to the court in support of its case.[22]In respect of the cross-claim, if there is a debt of which part, above the statutory minimum, is indisputable, then a petition can validly be presented even if the debt as claimed in the petition is for a larger sum, part of which is bona fide disputed. That was decided in Re Tweeds Garages Ltd [1962] Ch 406.[23]A validation order under section 127 is exceptional where the company is insolvent. Elevate must show that the disposition will be in the interests of creditors as a whole and will not result in unjustified dissipation or preference.

Discussion

[15]Elevate has not produced any evidence identifying specific payments omitted from Fine Star’s ledgers. Its assertion of £1.76 million of “uncredited payments” is wholly unparticularised. It is argued that information is difficult to obtain from Lloyds due to the freezing of the accounts.[16]It has been explained that Elevate has grown quickly. It may have grown quickly; however, its growth does not answer why it has no financial material of its own to justify the assertion of “uncredited payments”. It does not explain why there are no management accounts or books and records that can demonstrate to the satisfaction of the court that the ledgers produced by Fine Star are inaccurate due to omission. Bare assertion does not justify, through the medium of an injunction, a factual enquiry. As a result I cannot be satisfied that there is any real dispute as to the petition debt.[17]The alleged cross-claim of £334,376.23 is unsupported by contemporaneous documentation. The only maintenance costs evidenced contemporaneously are in the region of £17,000. There is no evidence of the substantial refurbishment works now alleged. Mr Brown’s acceptance that his invoice numbers were incorrect, without providing corrected invoices, further undermines the credibility of the cross-claim. Even if I were wrong about this conclusion the cross-claim does not equal or exceed the petition debt that has been verified by a statement of truth. I find that the cross-claim does not meet the threshold test: it is not genuine or substantial, alternatively it fails to meet the requirement to set off the entirety of the petition debt.[18]The allegation of interference with tenants is unsupported and does not bear on the issues before me.[19]The repossession of Elevate’s trading premises is a significant indicator of insolvency. Taken together with the cessation of rent payments and the absence of any coherent plan for clearing arrears exceeding £1.1 million, the evidence points strongly to Elevate being unable to pay its debts as they fall due.[20]Elevate’s financial evidence is unsatisfactory. The unexplained discrepancy between the projected and actual bank balances, and the lack of clarity regarding payments to insiders, mean that I cannot be satisfied that a validation order would protect the interests of creditors. On the contrary, there is a real risk of dissipation.

Conclusion

[21]Fine Star seeks permission to rely upon evidence from the Vatry proceedings. The evidence is relevant to consistency only. Elevate was invited to consent but did not respond until today’s hearing when no objection was offered. Permission will be granted. Conclusion Elevate has failed to demonstrate any genuine or substantial dispute as to the petition debt or any genuine and substantial cross-claim. It is not the function of the Companies Court to conduct a mini trial on the merits. Nevertheless, assertion is insufficient. Assertion must be supported by evidence. The petition is not bound to fail.[22]The application to restrain advertisement of the petition is dismissed.[23]The validation order made on 8 July 2026 is discharged.[24]Fine Star’s application under CPR 31.22(1)(b) and 32.12(2)(b) is granted.[25]The petition may be advertised on the first open date after 7 days. (Following submissions on costs)[26]The application is for indemnity costs. That is, indemnity costs in favour of the respondent payable by the applicant. The applicant had made two applications: one for the continuation of a validation order which was granted on 8 July this year, and the second, an application to restrain the advertisement of a petition which had been presented to the court.[27]In both respects, the applicant lost and the respondent succeeded and, therefore, costs, I think it has been agreed, should move from the applicant to the respondent.[28]The question then is whether or not the costs should be assessed on the standard basis or indemnity basis. Indemnity costs are appropriate only when the conduct of paying party is unreasonable to a high degree, and the court must therefore decide whether there is something in the conduct or action, or the circumstances of the case, which takes it out of the norm to justify an order for indemnity costs.[29]There are perhaps two things to be said in favour of the applicant – that is, in favour of standard costs. First, the applicant has been somewhat hampered in obtaining some evidence from the bank. That is a result of the bank freezing the account and not obeying the validation order made on 8 July.[30]Secondly, there had been a draft consent order that had not been agreed by the respondent, which would have permitted the applicant to make certain payments. The submission is essentially that the respondent should have agreed to that consent order, and the hearing would not have been necessary.[31]Against that argument and in favour of the respondent, it is said, first, that the basis upon which the restraining application was made was without any serious evidence to support it, which meant that the application simply could not succeed. The application had not been brought to court grounded in proper evidence. And the applicant had received from the respondent a schedule of sums which were said to be due, and the applicant simply did not respond in a timely manner, nor at all in relation to a large part of that schedule, nor identify what sums it could say should be set off as a result, for instance, of repairing and maintenance obligations.[32]The other factor is that the clauses in the leases, the 51 leases which the applicant had to pay rent under, included in clause 9.1, a clause that provided that payment of rent would be made without abatement, set-off or deduction. Clause 32 squarely provided that the responsibility was on the applicant to keep the premises in good condition. And lastly, under clause 33, only structural repairs which were not caused by the applicant were the responsibility of the respondent. Elevate has failed to engage with the terms of the lease and how they may effect the cross-claim or defence to the petition.[33]In that regard, it appears to me that the application to restrain was not only totally without merit, but it was made in the absence of evidence, in circumstances which can be described as beyond the norm.[34]I shall assess the costs on an indemnity basis. ---------------