Howell v Lerwick Commercial Mortgage Corporation Ltd [2015] EWHC 1177 (Ch) (01 May 2015)

Howell v Lerwick Commercial Mortgage Corporation Ltd [2015] EWHC 1177 (Ch) (01 May 2015)

A statutory demand should not be set aside under the court's residual discretion merely because a debtor's cross-claim reduces the debt below the bankruptcy threshold, unless it is clear that no bankruptcy petition could succeed. In this case, as there were other potential debts owed by Mr Howell to Lerwick, it could not be said that any petition would inevitably fail. The appeal was therefore dismissed.

Citation
[2015] EWHC 1177 (Ch)
Parties
Claimant and Appellant: Mark Howell; Defendant and Respondent: Lerwick Commercial Mortgage Corporation Limited
Jurisdiction
England and Wales
Judgment Date
01 May 2015
Procedural Posture
Bankruptcy Appeal / Appeal From Central London County Court Order Dismissing Application to Set Aside Statutory Demand
Outcome
Appeal dismissed
Legal Topics
Statutory Demand, Cross Claim, Threshold for Bankruptcy Petition, Interest on Judgment Debts, Discretion to Set Aside Statutory Demand
Insolvency Bankruptcy Statutory Demand Cross Claim Threshold for Bankruptcy Petition Interest on Judgment Debts Discretion to Set Aside Statutory Demand

Case Brief

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Parties

Mark Howell

Claimant and Appellant

Lerwick Commercial Mortgage Corporation Limited

Defendant and Respondent

Procedural Posture

Bankruptcy Appeal / Appeal From Central London County Court Order Dismissing Application to Set Aside Statutory Demand

Legal Issues

  1. 1 Whether a statutory demand should be set aside where the debtor has a cross-claim reducing the debt below the bankruptcy threshold but not extinguishing it
  2. 2 Whether the court should exercise discretion under Insolvency Rule 6.5(4)(d) to set aside the demand in such circumstances
  3. 3 Whether interest should be included in the cross-claim calculation

Ratio Decidendi

A statutory demand should not be set aside under the court's residual discretion merely because a debtor's cross-claim reduces the debt below the bankruptcy threshold, unless it is clear that no bankruptcy petition could succeed. In this case, as there were other potential debts owed by Mr Howell to Lerwick, it could not be said that any petition would inevitably fail. The appeal was therefore dismissed.

Court Disposition

Appeal dismissed

Orders

  • Statutory demand upheld in the sum of £3,935
  • No further relief granted to appellant