Where there is no evidence of lack of authority in placing orders which have not been paid, the court refused to allow an injunction to restrain a winding-up petition.

In the matter of A company (2012) (the company), a creditor had issued a statutory demand against it in relation to invoices for advertising placed with it by the company's sales and marketing manager (M) that were unpaid. The company argued that those orders had been placed without its authority and M admitted that she had exceeded her authority in so placing them.

The company alleged there was an improper relationship between M and her counterpart at the creditor which had led to the (increased) orders being placed. The company alleged that the creditor knew about this, especially as it had not chased for prompt payment of those invoices.

The court held there was no evidence that the creditor should have been aware of anything untoward or a lack of authority. The creditor did not know what the company's advertising budget was and M had given reasonable explanations as to the increase in orders. As the company's accounts department had not spotted that anything was wrong, there was no reason why the creditor would have.

In the circumstances, it was not appropriate for an injunction to be granted to restrain the winding-up petition.

Things to consider

There are certain grounds upon which the court will restrain a winding-up petition, including where:

  • there is a genuine dispute about the underlying debt;
  • there is a serious cross claim or right of set-off for an amount equal to or exceeding the petition debt, or which would reduce the debt to below £750 (the threshold for issuing winding up proceedings);
  • the petition is bound to fail as a matter of fact or law (i.e. the underlying claim is statute barred); or
  • it is oppressive or unfair.

Here, there was no genuine dispute as to whether the creditor was aware of any lack of authority.