Procedural Error with petition—fatal or not? (Re Saint Benedict’s Land Trust Limited)

Procedural Error with petition—fatal or not? (Re Saint Benedict’s Land Trust Limited)

The court had to consider whether a failure to comply with the procedures set out in the Insolvency (England and Wales) Rules 2016, SI 2016/1024 (IR 2016) for the issuing of a petition rendered the process null and void. There was further consideration of the inter-relationship between liability orders made for statutory deemed debts and the effect on the insolvency processes of potential disputes on that liability. In addition, the court had to consider the appropriateness of possible civil restraint order proceedings for unsuccessful applications. A salutary tale for those issuing petitions but also for those seeking to challenge proceedings on unpaid, deemed debts. Written by Graham McPhie, partner at Moon Beever LLP.

Re Saint Benedict’s Land Trust Ltd [2019] EWHC 3370 (Ch)

What are the practical implications of this case?

In a case that is undoubtedly fact specific, the key practical points that can be taken are:

  • a potential defect in procedure does not in itself render an action taken a nullity  
  • in challenging a liability under a statutory deemed debt for which the Magistrates Court has granted a liability order, the insolvency courts are likely to need more than an assertion that the debt is disputed  
  • the making of applications purely for matters of procedure will be viewed critically as to their purpose and could result in a finding that those applications are made totally without merit. Careful consideration must be given to the effect of making such applications for tactical reasons  
  • the context of this case has to be considered carefully as the decision could be said to be taken on the facts of this case and the overall conduct of the appellant. However, the points made above can be considered as of general application and should be considered in such circumstances  
  • the practical conclusion is that, if any debtor considers that there is a defence to a statutory debt, there must be a greater level of participation and challenge at the stage of the action in the Magistrates’ Court, as it will be difficult to dispute the debt subsequently to stall insolvency proceedings

What was the background?

The appellant had issued an appeal against the decision made by the district judge at first instance to dismiss a winding-up petition and to award costs to the petitioning and a supporting creditor. The petition had been dismissed because the underlying debt had been paid. The assertion was that the petition was invalid as the witness statement verifying it had not

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About the author:

Zahra started working as a paralegal at Lexis Nexis in Banking and Insolvency teams in April 2019. Zahra graduated with a 2.1 honours in a BA French and Spanish, completed the GDL at BPP University and is seeking some experience before commencing the LPC. She has undertaken voluntary work for law firms in London, Argentina and Colombia.