Injunction granted against presentation of winding up petition

Injunction granted against the presentation of a winding up petition where there was a genuine and substantial cross-claim, even though there was insufficient detail to allow the cross-claim to be properly pleaded.

The applicant, a property developer, applied for an injunction to restrain the presentation of a winding up petition for an undisputed £7 million debt on the basis it had a genuine and substantial cross-claim for at least £44 million.

The respondent, a construction company, had been instructed by the applicant to construct four residential apartment blocks. The blocks were constructed with external cladding that did not meet fire safety standards. The applicant thereafter obtained £25 million in remediation grants from the Government.

The applicant owned the freehold interest in the sites and alleged that it and the respondent were exposed to potential claims by the leaseholders of the flats. The applicant therefore claimed that it had a genuine and serious cross-claim against the respondent due to this potential liability.

The respondent denied liability and argued that: (1) the alleged cross-claim lacked detail, and (2) the quantum of any cross-claim did not exceed the debt.

The court granted the injunction. It found the applicant had crossed the minimum evidential threshold to establish a serious or genuine cross-claim. To be serious, a cross-claim had to be capable of being pleaded at some stage. This left scope for the court to find an alleged cross-claim to be genuine and serious even if it did not have (at that stage) all the information for it to be properly pleaded or supporting documents.

The undisputed facts showed that the respondent had been responsible for the cladding which rendered the flats not fit for habitation. The burden of proof then shifted to the respondent to show that it had a defence such that the cross-claim could not be regarded as genuine or serious. The respondent had not discharged that burden.

Regarding quantum, the court found that given the amount of remediation funding received by the applicant (which it was obliged to try and recover from other liable parties), there was a genuine and substantial chance that the value of the cross-claim exceeded the debt.

In regards to A Company [2024] EWHC 2656 (Ch).

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