Key point

Whilst a winding up petition is not the appropriate forum to conduct a “mini trial”, the court is not bound to dismiss the petition if the dispute raised by the debtor company lacks substance.

The facts

The Petitioner sought the winding up of the Debtor on the “just and equitable” ground, alleging fraud. The Petitioner presented evidence that the project had not been viable when the Debtor had enticed investment. The Debtor disputed the Petitioner’s claims and argued it was not appropriate to conduct a “mini trial” and that as a result the matter could not be resolved by the winding up court.

The decision

  • The Company’s evidence lacked substance. The Petitioner’s evidence was of substance.
  • To successfully argue that the case ought to be heard in a different forum the Company must present allegations of substance.
  • The Judge found there was a strong case of the Company trading with a lack of commercial probity and the Company ought to be wound up at the earliest convenience.

Comment

Simply because there is disputed evidence does not mean an issue cannot be resolved by the winding up court. The Court will not dismiss a winding up petition on the basis that the matter ought to be dealt with at trial without arguments of substance.

Pi Trustee Services 5G Limited v North West Land Fill Limited (unreported)

Laura Pick