Dingley & Ors v Nisa Retail Ltd

Dingley & Ors v Nisa Retail Ltd

The court refused to make a validation order for the payments made by MKG Convenience Ltd to NISA Retail Ltd after the presentation of the winding up petition, finding no special circumstances or benefit to creditors. NISA failed to demonstrate good faith or that the payments benefitted creditors, and the evidence was obstructive and unreliable. The change of position defence was also rejected as NISA did not act in good faith and, after advertisement of the petition, should be taken to have notice. The cash deposit was validly set off against pre-petition debts, and no order could be made regarding the shares as any claim would lie against URL, not NISA.

Parties
Applicant: Mustafa Hassanali Abdulali; Applicant: Neil James Dingley; Applicant: MKG Convenience Ltd (in Liquidation); Respondent: NISA Retail Ltd
Jurisdiction
England and Wales
Judgment Date
07 June 2019
Procedural Posture
Insolvency Application / Judgment After Contested Application
Outcome
Application by liquidators allowed in part; validation order refused; NISA ordered to repay void payments; no order regarding shares or cash deposit.
Legal Topics
Validation Order, Void Dispositions, Change of Position Defence, Liquidation, Restitution
Insolvency Company Law Validation Order Void Dispositions Change of Position Defence Liquidation Restitution

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Parties

Mustafa Hassanali Abdulali

Applicant

Neil James Dingley

Applicant

MKG Convenience Ltd (in Liquidation)

Applicant

NISA Retail Ltd

Respondent

Procedural Posture

Insolvency Application / Judgment After Contested Application

Legal Issues

  1. 1 Whether payments made by MKG Convenience Ltd to NISA Retail Ltd after presentation of a winding up petition are void under s 127 Insolvency Act 1986 and should be repaid
  2. 2 Whether a validation order should be granted for the payments
  3. 3 Whether NISA can rely on a change of position defence to resist repayment

Ratio Decidendi

The court refused to make a validation order for the payments made by MKG Convenience Ltd to NISA Retail Ltd after the presentation of the winding up petition, finding no special circumstances or benefit to creditors. NISA failed to demonstrate good faith or that the payments benefitted creditors, and the evidence was obstructive and unreliable. The change of position defence was also rejected as NISA did not act in good faith and, after advertisement of the petition, should be taken to have notice. The cash deposit was validly set off against pre-petition debts, and no order could be made regarding the shares as any claim would lie against URL, not NISA.

Court Disposition

Application by liquidators allowed in part; validation order refused; NISA ordered to repay void payments; no order regarding shares or cash deposit.

Orders

  • No validation order granted for payments totalling £162,307; payments are void and must be repaid by NISA to the liquidators.
  • No order made regarding the shares or cash deposit.