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Insolvency Law

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27 JUL 2009

Octagon Assets Ltd v Remblance and Another - 27 July 2009, The Times

The Times has published the Court of Appeal's (Lord Justices Ward, Mummery and Dyson) judgment in Octagon Assets Ltd v Remblance and Another. Here is the substance of the judgment:

"Where rent arrears were sought from both a corporate tenant and a guarantor it was ostensibly unjust to decline to set aside a statutory demand obtained against the guarantor mrerly because he could afford to pay the debt; if a statutory demand would not be sustained against the principal debtor it was also unjust to treat the guarantor differently.

The Court of Appeal so held by a majority, Lord Justice Mummery dissenting, when allowing the appeal of the first defendant, John Remblance, from Mr Justice Mann, who sitting in the Chancery Division on May 23, 2008, allowed an appeal by the claimant, Octagon Assets Ltd, from an order of District Judge Pearce, in Southend on Sea County Court on March 18, 2008, setting aside a statutory demand obtained against him. Octagon sought rent arrears against both Mr Remblance and the JBR Leisure Ltd.

LORD JUSTICE DYSON said that rule 6.5(4)(d) of the Insolvency Rules (SI 1986 No 1925) granted a residual discretion normally exercised in circumstances making it unjust for a statutory demand to give rise to bankruptcy consequences.

It was difficult to conceive of circumstances where ability to pay could be the sole, or principal reason for refusing to set aside a statutory demand, as the judge had found here.

Further, to allow the claimant to proceed against the first defendant via the insolvency route if it could not so proceed against the tenant, effectively the guarantor’s alter ego, would also be unjust.
The obligations upon tenant and guarantor were co-extensive, and there were no good reasons for distinguishing between the position in this case and that which would have obtained had the tenant applied under rule 6.5(4)(a) of the 1986 Rules to set aside a statutory demand.
Lord Justice Mummery dissented and Lord Justice Ward gave a concurring judgment."

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