Summary

Applications to wind up the respondent company, to strike out the petition and to amend the petition to include an amount of interest falling due after the date of issue.

Facts

Three applications were before the court; firstly, to wind up Richbell Strategic Holdings Ltd ('RSH') presented by the petitioner, Harpur Group Ltd ('HG'), secondly an application by RSH to strike out the petition and thirdly, an application to re-amend the petition. Prior to October 1994, the Harpur Group of companies was one of the sub-groups of companies within Richbell Group. A substantial reorganisation took place on 12 October 1994 and HG was formed as a holding company for two groups of companies. At this date there was a balance on the inter-company trading accounts between RSH and HG in the sum of #8.9m ('the principal sum') in favour of HG, and an unsecured Loan Note was issued by RSH in favour of HG by which RSH acknowledged that it owed the principal sum to the petitioner and undertook to repay in four tranches, each to be paid on "the last business day in July" 1996 to 1999 inclusive. In the event of late payment there was a provision of interest. Other conditions included that if RSH defaulted for a period of 30 days in making payment of any principal monies or interest due on the Note, the outstanding amount would become payable immediately on demand. The Note provided that the outstanding amount should be paid without regard to any equity between RSH and HG or any right of set-off or cross claim. Richbell Holdings Ltd guaranteed the performance of RSH under the Note. On 7 April 1997 HG served a statutory demand on RSH, the full amount of which was not paid by the latter. The petition was then issued based on the non-payment of sums identified in that demand. An application to stay or strike out the petition was dismissed by Rattee J. RSH contended that the parties had agreed a running account arrangement, the result being that the obligation to pay capital and interest under the Note was discharged without actual payment by being subsumed into the running account, and that if necessary, they could show the running account to be effectively in credit.

Held

(1) The monthly accounts were intended to run between the petitioner, the holding company of HG and the relevant holding company of the Richbell Group and were intended to have some legal effect. (2) RSH had a sufficiently arguable case for contending that its liability for interest payable during 1996, and #69,000 by way of capital repayment, had been subsumed into a running account which is the liability not of the petitioner but of the Richbell holding company to the petitioner. (3) Interest due at the end of March 1997 could not justify the petition. Nor could any claim contingent thereon (particularly the balance of the outstanding amount) found the basis of the petition. (4) Leave to re-amend the petition to include a post-writ cause of action (interest falling due after the date of issue) was granted. (5) Non-payment of interest due on 30 June 1997 without any explanation by RSH entitled the petitioner to rely on s.123(1)(e) of the Insolvency Act 1986.For a LAWTEL summary of related proceedings see In the matter of Richbell Strategic Holdings Ltd (2000) LTL 14/6/2000, Richbell Information Services v Atlantic General Investments (1998) LTL 18/11/98 and In the matter of Richbell Information Services Inc (1998) Times, January 21, 1999.