''Stonegate Securities Ltd v Gregory''

980 Year 980 ( CMLXXX) was a leap year starting on Thursday of the Julian calendar. Events By place Europe * Peace is concluded between Emperor Otto II (the Red) and King Lothair III (or Lothair IV) at Margut, ending the Franco-Germa ...

Ch 576 is a

UK insolvency law United Kingdom insolvency law regulates companies in the United Kingdom which are unable to repay their debts. While Bankruptcy in the United Kingdom, UK bankruptcy law concerns the rules for natural persons, the term ''insolvency'' is generall ...

case concerning the liquidation procedure when a

company A company, abbreviated as co., is a Legal personality, legal entity representing an association of legal people, whether Natural person, natural, Juridical person, juridical or a mixture of both, with a specific objective. Company members ...

is unable to repay its debts. It held that a winding up petition would not be granted to a petitioner to whom a debt was bona fide under dispute.L Sealy and S Worthington, ''Cases and Materials in Company Law'' (9th edn OUP 2010) 748-9

Facts

Mr Gregory in accordance with

Companies Act 1948 The Companies Act 1948 ( 11 & 12 Geo. 6. c. 38) was an Act of the Parliament of the United Kingdom, which regulated UK company law. Its descendant is the Companies Act 2006. Cases decided under this Act *'' Bushell v Faith'' 970AC 1099 *'' Sc ...

, section 223 (now

Insolvency Act 1986 The Insolvency Act 1986 (c. 45) is an act of the Parliament of the United Kingdom that provides the legal platform for all matters relating to personal and corporate insolvency in the UK. History The Insolvency Act 1986 followed the publication ...

, section 123) served a notice demanding payment of a £33,000 debt within 21 days. Stonegate had agreed to buy shares in Mr Gregory’s property company, Trinette Ltd, when it got

planning permission Planning permission or building permit refers to the approval needed for construction or expansion (including significant renovation), and sometimes for demolition, in some jurisdictions. House building permits, for example, are subject to buil ...

. The company accepted there was a contingent or prospective liability, but argued the debt was not presently due. At the first instance Mr Gregory accepted that there was a dispute about when the debt was due, and insofar as the debt was contingent, that the contingency might never happen at all. The company sought interlocutory relief restraining the petition. Blackett-Ord VC found there was a ''

bona fide In human interactions, good faith () is a sincere intention to be fair, open, and honest, regardless of the outcome of the interaction. Some Latin phrases have lost their literal meaning over centuries, but that is not the case with , which is ...

'' dispute about whether Mr Gregory was a creditor for a sum presently due and granted the injunction, provided that in three weeks the company would make a declaration of solvency. The company appealed.

Judgment

Buckley LJ held that

, section 122 had ‘no application to a case in which the creditor is a creditor in respect of a sum which is not presently due…’ The claim by Mr Gregory had to fail because ‘if the company in good faith and on substantial grounds disputes any liability in respect of the alleged debt, the petition will be dismissed or, if the matter is brought before a court before the petition is issued, its presentation will in normal circumstances be restrained.’ Goff LJ and Sir David Cairns concurred.

Notes

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References

*L Sealy and S Worthington, ''Cases and Materials in Company Law'' (9th edn OUP 2010) *R Goode, ''Principles of Corporate Insolvency Law'' (4th edn Sweet & Maxwell 2011) United Kingdom insolvency case law Court of Appeal (England and Wales) cases 1980 in United Kingdom case law

Facts

Judgment

See also

Notes

References