Rebecca Farrell helps school secure the dismissal of a six-figure winding up petition presented by landlord

24th July 2024

In a judgment handed down last week by the Insolvency and Companies Court ICC Judge Barber determined that it was appropriate to exercise her discretion and dismiss a petition presented against a company incorporated to run a school (“the Company”). In so doing, the Judge acknowledged that:

a. the Company demonstrated a strongly arguable case that the majority of the petition debt did not represent rent arrears, but the purchase price for shares in the Company; and

b. the Company had a strongly arguable cross-claim that the purported forfeiture by physical re-entry on the school’s premises was unlawful given that no formal demand at common law was made for rent prior to re-entry. Alternatively, there was no demand that complied with the rules of prior demand at common law, for rent that fell due after the petition was presented. In addition, the court also accepted the argument that the landlord had waived any right to forfeit for rent before 25th March 2023 by presenting and serving the petition.

With respect to the cross-claim, the court quantified general damages for trespass in the sum of, at least, £546,000.00 in general damages. The court also recognised the potential claim for exemplary damages in addition to the general damages claimed.

The court commented that the circumstances of the case were highly unusual. A particularly notable feature of the matter was that the landlord sought to forfeit the relevant lease by physical re-entry between the first and second hearing of the petition and the school closed as result of the purported forfeiture (before the second hearing of the petition).

Relief from Sanctions

In reaching its decision, the court also acceded to the application made by the Company for relief from sanctions for its failure to file and serve evidence not less than six weeks before the hearing. The Company was unable to use its own funds to instruct solicitors and so it had taken time for the director to raise his own funds to prepare late witness evidence. The court accepted, in the circumstances, that it would be unjust and disproportionate to the breach to deny the Company the relief sought.

Rebecca was instructed by Christopher Parsons from Moore Barlow.

LexisNexis Article

Rebecca FarrellRebecca FarrellCall: 2016’s analysis of the case for LexisNexis can be found here.