Application to set aside statutory demand - debtors raising counterclaim - previous judgment holding counterclaim to be unarguable and refusing permission to appeal not determinative of whether genuine triable issue

Thomas-Everard and others v Society of Lloyds: ChD (Mr Justice Laddie): 18 July 2003

The defendant obtained judgments against the claimants, former Lloyd's names, who raised cross-claims alleging fraudulent misrepresentation.

After the names had lost their counterclaim, the Court of Appeal allowed them to raise negligent misrepresentation as an amendment to the counterclaim proceedings (see Society of Lloyd's v Jaffray [2002] EWCA Civ 1101).

On the application to amend the counterclaim (see Society of Lloyd's v Laws [2003] EWHC 873), the judge held, among other things, that most of the names had no pleadable claim.

The judge refused permission to appeal and the names' application to the Court of Appeal for permission was currently on foot.

Lloyd's then served statutory demands in respect of the judgment debts and the names applied, under rule 6.5(4) of the Insolvency Rules 1986 (SI 1986/1925), to set aside those demands and to plead new counterclaims on the back of the Court of Appeal's decision.

Jeremy Callman (instructed by Grower Freeman) for the names; Edward Bannister QC and David Foxton (instructed by Freshfields Bruckhaus Deringer) for Lloyd's.

Held, allowing the application and setting aside the statutory demands, that in an application under rule 6.5(4) of the 1986 Rules, the fact that a first instance judge had previously held the issue to be unarguable, and the fact that he had refused permission to appeal, were important considerations in deciding whether the issue was genuinely triable and the appeal was real, but they were not determinative; and that the question to ask when a challenge was made to a debt at the set-aside stage was whether the debtor had raised a genuine triable issue.