London Borough of Camden Council & Anor v Saint Benedict's Land Trust Ltd

Factual and Procedural Background

This opinion concerns an application by Company A for permission to appeal and, if granted, to set aside the order of District Judge [Last Name] dated 22 February 2019. The order dismissed a winding up petition presented against Company A by Company B in respect of unpaid business rates totaling £40,103.98, supported by Company C regarding unpaid costs orders. The petition was dismissed because Company A had paid the underlying debts after the petition’s presentation. Company A contended the petition was defective due to a witness statement verifying it not being signed as required by Rule 7.6 of the Insolvency Rules 2016, and that it was unaware of this defect. Company A argued it was forced to pay the amount claimed to prevent the petition’s advertisement and sought an order striking out the petition with costs in its favor.

District Judge [Last Name] also declared two applications by Company A—for transfer of the petition venue and to vacate the hearing—as totally without merit, and ordered the matter to be transferred to a High Court Judge to consider a civil restraint order against Company A. Company A appealed these declarations.

The petition debt arose from eleven liability orders for unpaid business rates made by a Magistrates Court in 2016 and 2017. Notices demanding payment were sent to Company A in September 2018 but were received late. Company A applied to set aside the liability orders, contending that presenting the petition would be an abuse of process. Company B maintained the orders were regular and enforceable debts under relevant legislation.

The petition was presented in Manchester due to the location of Company B’s solicitors, who were also acting in related proceedings. Company A unsuccessfully sought an injunction to restrain advertisement of the petition. Subsequently, Company A sent payment equal to the petition debt to Company B’s solicitors, requesting it be held on terms awaiting the outcome of Company A’s applications to set aside the liability orders. Company B’s solicitors rejected these terms and treated the payment as having discharged the debt.

Company A then applied for the petition to be transferred to London, struck out as an abuse of process, and for wasted costs, arguing the appropriate venue was London and that the petition was abusive due to ongoing challenges to the liability orders. The petition and applications were adjourned to a hearing in Manchester in February 2019.

Company C supported the petition, having previously obtained costs orders against Company A which Company A failed to pay, resulting in statutory demands and further applications. Company A eventually paid Company C's debt shortly before the February 2019 hearing.

Shortly before the hearing, Company A applied to vacate the hearing on the basis that the witness statement verifying the petition was unsigned. Company B’s solicitor provided a late witness statement verifying the petition and explaining the omission as accidental.

Legal Issues Presented

1. Whether the failure to sign the witness statement verifying the winding up petition rendered the petition a nullity ab initio.
2. Whether the District Judge erred in applying Rule 12.64 of the Insolvency Rules 2016 to waive non-compliance with Rule 7.6 regarding verification.
3. Whether the applications by Company A to transfer the petition venue, strike out the petition, and vacate the hearing were totally without merit.

Arguments of the Parties

Appellant's Arguments

• The petition was inherently defective and void because the witness statement verifying it was unsigned, breaching Rule 7.6 of the Insolvency Rules 2016.
• Company A was unaware of this defect and was induced to pay the petition debt under the mistaken belief that the petition was properly verified.
• The District Judge should have struck out the petition and awarded costs to Company A on this basis.
• The applications to transfer the petition to London and to vacate the hearing were justified given the procedural irregularities and abuse of process.

Respondent's Arguments

• The liability orders underlying the petition were regular and enforceable debts, and the petition was properly founded on them.
• The failure to sign the witness statement was an accidental omission that did not cause substantial injustice and was remedied by a subsequent signed statement.
• Rule 12.64 permits the court to disregard formal defects unless substantial injustice occurs that cannot be remedied.
• The petition debt had been paid, negating any prejudice to Company B, and the petition was not an abuse of process.
• The applications to transfer venue and vacate the hearing were without merit and amounted to an abuse of court process.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
R v Brighton and Hove Justices [2004] EWHC 1800 (Admin)	Principles regarding setting aside liability orders in Magistrates Courts.	Supported the view that longstanding liability orders are regular and enforceable, and applications to set them aside are bound to fail absent compelling grounds.
Re The Western Benefit Building Society (1864) 33 Beav 368	Verification of winding up petitions and timing of affidavits.	Confirmed that defects in verification do not necessarily invalidate a petition ab initio, and that procedural defects can be remedied without restarting the process.

Court's Reasoning and Analysis

The court examined the requirements for verification of winding up petitions under Rules 7.6, 7.7, and 7.9 of the Insolvency Rules 2016. It noted that verification can be by a statement of truth endorsed on the petition or by a separate witness statement, with no express timing requirement for signing the latter. There is no requirement for the witness statement to be served on the company with the petition.

The court reasoned that the purpose of verification is to provide evidence at the hearing to decide whether a winding up order should be made. The absence of verification at the time of filing does not render the petition invalid ab initio. This conclusion was supported by the precedent in Re The Western Benefit Building Society, where procedural defects in verification were remedied without invalidating the petition.

The court further considered Rule 12.64 of the Insolvency Rules 2016, which allows the court to disregard formal defects unless substantial injustice results that cannot be remedied. The District Judge found no substantial injustice, particularly as the petition debt had been paid and the defect was raised late. The court agreed with this approach, finding the failure to verify did not prejudice Company A.

The court also found that the applications by Company A to transfer the petition, strike it out, and vacate the hearing were without merit, particularly given Company A’s choice to pay the petition debt and the timing and nature of the applications. The court noted that further adjournments and hearings would have been disproportionate and a waste of court resources.

Holding and Implications

The court REFUSED PERMISSION TO APPEAL Company A’s application to set aside the District Judge’s order dismissing the winding up petition and related applications.

The petition was not invalidated by the unsigned witness statement, and the District Judge correctly applied Rule 12.64 to waive the defect. The petition was properly dismissed as the underlying debts had been paid, and the applications to transfer venue and vacate the hearing were totally without merit.

The direct effect is that the dismissal of the petition and the costs orders in favor of Company B and Company C stand. No new precedent was established, and the court will consider costs and the possibility of a civil restraint order against Company A at a subsequent hearing.