A statutory demand was served against the guarantor of the lease after rent arrears arose. He applied for the demand to be set aside, and now appealed against its refusal. He said that the court would have set aside such a demand against the tenant, and should provide similar relief to a guarantor.
Held: (Mummery LJ dissenting) The appeal succeeded. The tenant complained of an interference with its right to quiet enjoyment, and its claim was arguable. A right of set off was expressly excluded by the lease, and therefore the guarantor had to rely in the judge’s discretion. The judge would have granted such relief but for the fact that the guarantor was in a position to pay. He was wrong to do so: ‘In view of the fact that JBR has a counterclaim which may exceed the arrears of rent, it is likely, assuming that the Insolvency Rules applied to it, that it would be able successfully to rely upon rule 6.5(4) (a) to set the statutory demand aside because it would be unjust not to do so. Having regard to the co-extensive nature of the guarantor’s liability, and the underlying need for comparable treatment being afforded under rule 6.5(4) (d), justice demands similar treatment for Mr Remblance.’
Judges:
Lord Justice Ward, Lord Justice Mummery and Lord Justice Dyson
Citations:
[2009] EWCA Civ 581, Times 27-Jul-2009, [2009] WLR (D) 196, [2010] Bus LR 119, [2009] NPC 79, [2009] BPIR 1129
Links:
Statutes:
Insolvency Rules 1986 6.5, Insolvency Act 1986 267(2)(c)
Jurisdiction:
England and Wales
Citing:
Cited – Altonwood Ltd v Crystal Palace FC (2000) Ltd ChD 7-Mar-2005
The landlord claimed arrears of rent and other payments due under the lease of the football ground occupied by the club. A licence had been granted for the accomodation to be shared with Wimbledon Football Club. The rent varied with the gate . .
Cited – Chan v Appasamy 2008
The test for the exercise of the discretion to set aside a statutory demand is whether there are circumstances which would make it unjust for the statutory demand to give rise to insolvency consequences in the particular case. . .
Cited – Budge v AH Budge (Contractors) Ltd CA 1997
When being asked to set aside a statutory demand, and exercising the statutory discretion, the real question is whether the applicant can show ‘a substantial reason comparable to the sort of reason one sees in paras (a), (b) and (c) of r 6.5(4), why . .
Cited – Lep Air Services v Rolloswin Investments Ltd; Moschi v LEP Air Services HL 1973
The obligation of a guarantor under a contract ‘is not an obligation himself to pay a sum of money to the creditor, but an obligation to see to it that another person, the debtor, does something.’ When a repudiatory breach is accepted by the injured . .
Cited – Continental Illinois National Bank and Trust Company of Chicago v John Paul Papanicolaou (The Fedora) CA 1986
The court considered the effect of a guarantee clause.
Held: The provisions of the guarantee went to timing and cash flow rather than liability. A term excluding a right of set-off is not to be treated in the same way as an exclusion clause. . .
Cited – In re a Debtor (No 1 of 1987), ex parte the Royal Bank of Scotland CA 1989
A statutory demand as served showed an incorrectly calculated sum owed and was in the wrong form.
Held: The application to set the demand aside was refused. A statutory demand should not be set aside for a mere technicality.
Lord Justice . .
Cited – Garrow v Society of Lloyd’s ChD 18-Jun-1999
Lloyds sought to claim against the Names on a ‘pay now, sue later’ clause.
Held: The power to order a stay of execution for possession remained and could be exercised in an appropriate case even though a cross-claim under which it was . .
Cited by:
Cited – Shaw and Another v MFP Foundations and Piling Ltd ChD 6-Jan-2010
The defendants appealed against a refusal to set aside statutory demands adjudicated due under the 1996 Act. They said that the judge had accepted that he was bound by MFO and that it was on all fours, but he had not followed it.
Held: The . .
Lists of cited by and citing cases may be incomplete.
Landlord and Tenant, Insolvency
Updated: 28 July 2022; Ref: scu.347014