England and Wales High Court (Chancery Division) Decisions

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Cite as: [2007] EWHC 2137 (Ch)

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		Neutral Citation Number: [2007] EWHC 2137 (Ch)
		4143 of 2007

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

Royal Courts of Justice
Strand
London WC2A 2LL

12th July 2007

B e f o r e :

MR JUSTICE BRIGGS
____________________

RE A COMPANY

____________________

Digital Transcript of Wordwave International, a Merrill Communications Company
PO Box 1336, Kingston-Upon-Thames KT1 1QT
Tel No: 020 8974 7300 Fax No: 020 8974 7301
Email Address: Tape@merrillcorp.com
(Official Shorthand Writers to the Court)

____________________

MR WHALE appeared on behalf of the Company.
MR McILROY appeared on behalf of the petitioning creditor.
____________________

HTML VERSION OF JUDGMENT
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MR JUSTICE BRIGGS: This is an application by Foundation Piling Limited to restrain advertisement of a winding-up petition presented by Mr Anthony Coyle on 12^th June 2007 on the basis of unpaid debts amounting in aggregate to £4,588.38. Restraint of advertisement and indeed the striking out of the petition is sought upon the basis that, of that sum, the company has proffered by cheque but have had rejected a payment of £2,238.38 and that the balance is the subject of a genuine cross-claim for £2,000 plus VAT being an alleged finder's fee which the company says the petitioner, Mr Anthony Coyle, agreed to pay in connection with having had referred to him by the company a valuable piece of work for a third party.

The test for applications of this kind is that the court will restrain advertisement and strike out a petition if it is satisfied that, in relation to that part of the debt alleged to be due and which remains unpaid or in respect of which no payment has been tendered, there exists a dispute which has been variously described in the authorities as "a bona fide dispute on substantial grounds" or "a genuine and serious dispute", or "a cross claim that has some merit or some substance". Those tests, in their various formulations, impose a threshold similar to or possibly slightly higher than the threshold for obtaining permission to defend under Part 24. I must be satisfied that there is here both a bona fide cross claim and one which is, on the material before me, of sufficient grounds to be properly described as having some merit or being of some substance or being (in the language of Part 24) one giving rise to a real rather than fanciful prospect of success if pursued in ordinary litigation. It is not for me to decide whether the cross claim is probable in the sense of more likely than not to succeed, but merely whether it is of some merit.

The evidence in support of the existence of a cross claim for £2,000 plus VAT is primarily contained in the witness statement of Mr Schuker who is an employee of the company and who says that he agreed with Mr Coyle that a finder's fee would be payable by Mr Coyle to the company. His evidence is that he indicated to Mr Coyle that it would be in the region of £1,000 to £2,000 and that Mr Coyle confirmed that he was happy with this arrangement. Later evidence from Mr Edmondson, the contract director of the company, is that Mr Schuker had told him that the sum of £2,000 had been agreed between him and Mr Coyle as the finder's fee but that in a conversation with Mr Coyle, Mr Coyle having acknowledged that a fee was payable, said that he considered that it might be less than £2,000.

On that basis it seems to me that the evidence discloses not an agreement to pay precisely £2,000 plus VAT but an agreement to pay a reasonable sum by way of finder's fee which, in the event of dispute, would have to be quantified in accordance with well-established principles under the doctrine of quantum meruit.

Mr McIlroy, who appears on behalf of the petitioning creditor Mr Coyle, submits that I should conclude that, on the evidence before the court, there has not been put forward a cross claim sufficient to be described as having some merit or being genuine and serious or of substance. He makes a number of points about the evidence proffered on behalf of the company.

First, that no date is provided for the alleged conversation between Mr Schuker and Mr Coyle; secondly, that in the company's first letter asserting the existence of a finder's fee (incidentally sent after the presentation of the petition) it is suggested that the agreement had been made between Mr Coyle and Mr Peterson; thirdly, that the conversation described falls short of evidencing an intention to create legal relations; fourthly, that in any event it is clear that no specific price was agreed and that in any case this finder's fee was only invoiced on terms that it was payable 28 days from invoice and that that 28-day period would not expire until 15^th July.

In substance, Mr McIlroy's submissions come to this. He submits that, if this matter were pursued in ordinary litigation, the company's cross claim would be bound to fail.

In my judgment, while the various criticisms which have been advanced against the company's alleged cross claim are all of some substance in themselves both singularly and in the aggregate save for the assertion that, in any event, the finder's fee is not yet due (to which I will return in a moment), they do not come anywhere near being sufficient to persuade me that the alleged cross claim is without merit, lacking in genuineness or seriousness or lacking in substance. It seems to me that what is alleged here is an entitlement arising out of an oral discussion. It is right to say that Mr Coyle denies that any such discussion occurred but, against that, there is evidence to the contrary both from Mr Schuker and from Mr Edmondson that Mr Coyle himself acknowledged that he had agreed to pay a finder's fee, albeit not in a precise amount. Those matters seem to me to be quintessentially matters calling for a trial to which the various criticisms of the consistency and precision of the company's case would no doubt be advanced by Mr Coyle by way of defence to that cross claim and his criticisms may or may not succeed in persuading a judge at trial that the cross claim is without substance.

It follows that, in my judgment, subject only to the point that the cross claim is not yet due, there is disclosed a sufficient basis upon which the court ought to restrain advertisement and indeed strike out the petition.

As for the point that the finder's fee is not due, that might have been a point of substance if this application had been to restrain presentation of the petition, but it is not suggested by the petitioner that it is going to be advertised before 15^th July, by which time, on the 28-day time for payment assumption advanced by Mr McIlroy on the basis of the company's own invoice, the cross claim, if otherwise a good one, will be due. In those circumstances the point that the cross claim, even if a good one, will not be due until 15^th July seems to me to be of no substance when it comes to the question whether the petitioner should be permitted to advertise his petition. Either by the time of the advertisement or extremely shortly thereafter there will be a genuine claim that there is an amount due by the petitioner to the company and one which can only be resolved at a trial.

In those circumstances I propose to grant the relief sought by the company's application.

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