A Company (Number Cr-2024-Bhm-000012), Re

Factual and Procedural Background

The Petitioner and the Company entered into a supply agreement in June 2022, which was terminated by the Petitioner in October 2022 due to non-payment of invoices totaling approximately £73,000. A statutory demand was served on the Company on 13 December 2023 for £84,149.69 including interest and costs.

On 3 January 2024, the Company, via its director, submitted an application by email to the Business and Property Courts (BPC) in Birmingham seeking an injunction restraining the Petitioner from presenting a winding up petition. The application was supported by a witness statement asserting a dispute and counterclaim regarding the debt.

The BPC office in Birmingham accepted the application on 5 January 2024 and set a hearing date for 19 January 2024, notifying the parties accordingly. Unknown to the Company, the Petitioner had electronically submitted a winding up petition to the BPC in Manchester on 12 January 2024 using the court's CE-File system.

On 14 January 2024, the BPC in Manchester notified the Petitioner that the petition filings were accepted but required payment of the Official Receiver's deposit (£2,600) within five working days to proceed. The Petitioner posted a cheque for the deposit on 15 January 2024.

Following receipt of the application copy and a telephone conversation with the Petitioner's solicitor, the Company sought an adjournment of the hearing. The solicitor indicated the petition had already been presented but offered to delay advertising to enable the Company to apply to prevent notice of the petition.

The Company’s director contacted the court offices, confirming the petition had not been sealed or issued due to non-payment of the deposit. The Company notified the Birmingham court of the purported petition presentation in Manchester.

His Honour Judge Tindal made a first order on 17 January 2024 preventing the petition or any related petition from being issued pending the hearing, scheduled for 24 January 2024.

The deposit cheque was received on 18 January 2024, and the BPC in Manchester sealed and issued the petition electronically, placing it on the public list of pending petitions.

Subsequently, the Company was informed of the petition’s appearance on the public list and protested the issuance to the courts. The Judge reconsidered and on 18 January 2024 made a second order dismissing the injunction application, vacating the hearing, and rescinding the first order.

The Company then applied to the BPC in Manchester for an injunction to restrain advertisement of the petition. An interim order was granted on 6 February 2024. The Company also sought permission to appeal the second order, which was granted with a stay on advertisement pending appeal.

Legal Issues Presented

1. When is a winding up petition considered to be "presented" in the context of electronic filing and the requirement to pay the Official Receiver's deposit?
2. Whether the first order made by the Judge, restraining the issue of the petition, was effective and properly rescinded by the second order.
3. Whether the petition should be struck out or stayed on grounds that it was presented or issued in breach of the first order.

Arguments of the Parties

Appellant's Arguments (Company)

• The first order constituted an injunction restraining presentation of the petition, effective when made because the Official Receiver's deposit cheque had not been received, so the petition was not presented.
• If the first order was an injunction restraining issuance rather than presentation, it was still effective because the petition had not been issued (sealed) at the time the order was made.
• The petition was presented and issued after the first order was made and in breach of it, warranting striking out or staying the petition.

Respondent's Arguments (Petitioner)

• The first order was made under Rule 7.24(1) for an injunction restraining presentation but was either misconceived or ineffective.
• If the order was intended to restrain issuance, it was misconceived because only the court can issue a petition and cannot injunct itself.
• The petition was presented when submitted electronically on 12 January 2024, i.e., when delivered to the court, regardless of payment of the deposit.
• Rules relating to payment of the Official Receiver's deposit relate to court filing and acceptance, not the moment of presentation by delivery.
• The Insolvency Practice Direction’s provisions deeming presentation to occur on payment of the deposit are ultra vires and inconsistent with the Insolvency Act and rules.
• Practical certainty about the date of presentation is maintained by equating presentation with delivery, not dependent on subsequent payment.
• The Judge was entitled to rescind the first order under Rule 12.59 as it had no practical or legal effect.

Table of Precedents Cited

Court's Reasoning and Analysis

The court examined the concept of "presentation" of a winding up petition in light of statutory provisions, rules, practice directions, and the evolution of court procedures including electronic filing. The court recognized that the delivery of the petition document to the court is the core element of presentation. However, it emphasized that presentation must be "valid presentation," requiring compliance with all statutory, rule-based, and practice direction requirements, including payment of the Official Receiver's deposit.

The court traced the historical and legislative context, noting that since 1856 an affidavit verifying the petition had to accompany the petition at presentation, and since 1986 a deposit must be paid before presentation. This requirement is reflected in Rule 7.7(2) of the 2016 Rules and the Insolvency Fees Orders.

The court interpreted Rule 7.7 such that the petitioner must deliver the petition to the court for filing, but the court cannot file the petition unless a receipt for the deposit is produced at presentation. Payment of the deposit is thus a precondition to valid presentation.

Electronic Working procedures were considered, including the Practice Direction 51O, which provides that petitions submitted without payment of the deposit will not be accepted or made public until payment is received. The court found that the petition in the instant case was improperly marked as "accepted" before payment, which was erroneous.

Regarding the first order, the Judge distinguished between "presentation" and "issuance" of the petition, correctly noting that the petition had not been issued (sealed and delivered) at that time. The first order was a direction to the Manchester court office not to issue the petition pending the hearing, not an injunction against the Petitioner.

The second order was made after the deposit was received and the petition issued. Although the Judge was mistaken in thinking the petition had been presented on 12 January, the court found no abuse of process or breach by the Petitioner. The petition was validly presented on receipt of the deposit on 18 January.

The court agreed with the Judge’s pragmatic decision to dismiss the injunction application and rescind the first order, leaving substantive challenges to the petition to be addressed in fresh proceedings in Manchester.

Holding and Implications

The appeal is dismissed.

The court held that a winding up petition is only presented when the petition is delivered to the court in compliance with all statutory, rule, and practice direction requirements, including payment of the Official Receiver's deposit. Presentation does not occur merely upon electronic submission without payment. The first order preventing issuance of the petition was valid but was overtaken by the subsequent proper issuance after payment. The second order dismissing the injunction application and rescinding the first order was correct.

The decision clarifies the legal meaning of "presentation" of a winding up petition in the context of electronic filing and payment requirements, reinforcing that payment of the deposit is a necessary condition for presentation. No new precedent was set beyond applying existing rules and practice directions to the electronic working environment. The direct effect is that petitions submitted electronically but without deposit payment are not presented until payment is made, impacting the timing of procedural rights and consequences under insolvency law.