ICC Judge Mullen’s decision in Sunset Ltd & Anor v Al-Hindi [2023] EWHC 2443 (Ch) emphasises the importance of ensuring the existence of a debt capable of forming the basis of a bankruptcy petition at the time of presentation.
The petition in this case was presented against Mr Al-Hindi by Sunset Limited and Morville Limited on 23 June 2022 based on his failure to comply with statutory demands dated 29 March 2022 claiming £248,750 said to be due by way of unpaid rent under leases of four London properties.
The petition had a messy procedural history, but by the time of the final hearing only one question fell to be decided, which was the effect on the petition debt of s 48 Landlord and Tenant Act 1987. The section provides:
“(1) A landlord of premises to which this Part applies shall by notice furnish the tenant with an address in England and Wales at which notices (including notices in proceedings) may be served on him by the tenant.
(2) Where a landlord of any such premises fails to comply with subsection (1), any rent, service charge or administration charge otherwise due from the tenant to the landlord shall (subject to subsection (3)) be treated for all purposes as not being due from the tenant to the landlord at any time before the landlord does comply with that subsection.
(3) Any such rent, service charge or administration charge shall not be so treated in relation to any time when, by virtue of an order of any court or tribunal, there is in force an appointment of a receiver or manager whose functions include the receiving of rent, service charges or (as the case may be) administration charges from the tenant.”
The address for service given in the tenancy agreements in relation to the properties was in Jersey and not in England and Wales. On that basis, the debtor’s case was that the requirements of s 48(1) of the 1987 Act had not been met until 6 February 2023 when notice of an address in England and Wales, expressed to be given pursuant to s 48, was served on him. That was long after presentation of the petition. Counsel for the debtor argued that until a proper address for service of notices had been given no rent was due, so there was no debt when the petition was presented.
Following consideration of Dallhold Estates (UK) Pty Ltd v Lindsey Trading Properties Inc and Rogan v Woodfield Business Services Ltd Judge Mullen agreed. He held that late service of notice could not retrospectively cure the defect of having failed to serve one earlier. He posed the following question which he went on to answer:
“Was the debt due ‘immediately’ or ‘at some certain, future time’ ‘at the time the petition was presented’ for the purposes of section 267 [Insolvency Act 1986]? The answer must be no. The failure to serve the section 48 notice meant that the debt cannot be treated as due at the time the petition was presented. Nor was it due at some ‘future, certain time’ as a compliant notice might never have been served.