In the recent High Court case of The One Collection Real Estate Ltd v Insolvency & Law Ltd [2023] EWHC 2673 (Ch), HHJ Kramer found that winding up petitions, like other civil jurisdiction actions, ought to be issued and heard in the court with the closest link to the parties.

BACKGROUND

A winding up petition was issued in the Business and Property Court in London on 18/01/23. The petition was defended and the respondent company made an application to transfer to the Business and Property Court in Newcastle, where the respondent company (the company) is based.

The company argued the petition should have been issued in the District Registry at Newcastle County Court, as the Registry with the most or closest links, pursuant to CPR PD57AA. The petitioner argued that winding up petitions are not ‘claims’ as they are very distinct in nature, and therefore Part 57AA does not extend to such petitions.

THE JUDGMENT

Upon considering the scope of Part 57AA, HHJ Kramer mused at [12] the practical implications of the convenience of bulk issuing of winding up petitions compared to the administrative inconvenience of transferring large numbers of cases to their regional District Registries. However, he ultimately acceded to the submission of counsel for the company, and stated, “Mr Rodgers response is to say “these are the rules”, the fact that it may be commercially attractive for some larger solicitors and bulk issuers to work in the way they do, should not depart from the rules“

The Judge found at [20] that the word ‘claim’ in para 2.3, CPR PD57AA applies to petitions and claim forms equally. In applying this interpretation to paragraph 2.3 of the Practice Direction, the Judge found at [19] that there is a  “mandatory requirement that the claim must be issued on the circuit in which the relevant district registry is located, but if it has got links with more than one circuit, then it should be issued in the one with the most significant links”.

WHAT AMOUNTS TO A LINK?

In determining whether the petition in this matter ought to have been issued in the District Registry at Newcastle County Court, HHJ Kramer considered the test at CPR 57AA PD 2.3(3), namely whether:

“(a) one or more of the parties has its address or registered office in the circuit in question (with extra weight given to the address of any non-represented parties);

(b) at least one of the witnesses expected to give oral evidence at trial or other hearing is located in the circuit;

(c) the dispute occurred in a location within the circuit;

(d) the dispute concerns land, goods or other assets located in the circuit; or

(e) the parties’ legal representatives are based in the circuit.”

The Judge found that whilst (b) and (d) did not apply to this matter, the other three criteria were met. The company is situated in Newcastle and their legal representatives are based there. Most notably, however, the Judge included (c) on the basis that the property which is the subject of dispute which forms the basis of the debt is situated in Newcastle. This is notwithstanding the fact that the petitioner, an assignee of the debt, is based in London. HHJ Kramer said at [26]: “… if you are in the business of purchasing debts from  people around the country, you have to expect that, if you wish to pursue the debts, you have to pursue the debtor on their home territory, where the debt occurred.”

The Judge then addressed CPR r.30.3(2), which sets out factors to be considered when transferring between District Registries including the value and complexity of the claim, convenience and fairness to the parties, public interest and judicial availability in the region.  Finally, he considered the remainder of CPR PD55AA, para 3.3, concerning links between the case and the circuits – namely: court resources, wishes of the parties, international nature of the case and judicial availability.  Again, HHJ Kramer determined that it was right for this matter to be heard in Newcastle.

CONCLUSION

The implications of this decision are not, therefore, a blanket ban on bulk issuing but more a nuanced warning that some consideration ought to be given to the nature of the claim and position of the parties before issuing indiscriminately.

Winding up petitions can still be bulk issued at one court or specific hearing centre, however, bulk petitioners (and indeed their solicitors) ought to be aware that this can be challenged if there is no, or a weak, link to the circuit in which the petition is issued. The decision of HHJ Kramer is therefore to be heeded with caution.

In this instance, costs sanctions were imposed following the decision on the application. Whilst it could be argued, and very well may be in future proceedings, that costs should be determined in the petition, at the very least any application to challenge the location where the petition was issued will most certainly cause delay to the winding up procedure itself, which no doubt is something petitioners would wish to avoid.