Wrongful winding-up petition and unreasonable refusal to mediate — the costs consequences
The court has reaffirmed the danger of using a winding-up petition as a means of debt collection where the underlying debt is disputed and of refusing to mediate.
In Lakehouse Contracts Ltd v UPR Services Ltd, there was a dispute between the parties over the value of scaffolding work invoiced to Lakehouse by UPR. Lakehouse set out details of why UPR’s valuation of the works was disputed and paid the sum it agreed was due. UPR issued a winding-up petition for the balance but gave an undertaking not to advertise the petition without giving 14 days’ notice. UPR also asked Lakehouse to mediate the disputed sum so as to avoid further costs being incurred. Lakehouse refused to do so unless the petition was withdrawn and its costs paid.
At the hearing of the petition, UPR agreed to it being struck out on the basis there would be a mediation of the underlying dispute. Lakehouse refused to mediate the costs of the petition…
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This was the finding of the High Court following an appeal by the losing party from a master’s decision that relief should be granted.