Current Law Cases



statutory demands; setting aside; application pending for permission to appeal against rejection of counterclaims; counterclaim raised genuine triable issues


Everards v Society of Lloyd's


(Ch D) Chancery Division


July 18, 2003


Laddie, J.


Insolvency Rules 1986 (SI 1986 1925) r.6.5(4)(a)


[2003] EWHC 1890


Times, August 28, 2003


, a Lloyd's Name, applied to set aside statutory demands issued by L. The statutory demands were based on judgment debts arising from E's refusal to pay a compulsory reinsurance premium. The judgment debtors had issued cross claims alleging fraudulent misrepresentation.


Although L was found to have made false representations, the Names failed to prove fraud. However, the Names were given the opportunity to amend their claims so as to bring actions in negligent misrepresentation. Prior to the hearing of the amended claims, L had served the statutory demands at issue in the instant case. At the subsequent trial of the negligent misrepresentation claims, the Names were largely unsuccessful and permission to appeal was refused. The Names then lodged an application with the Court of Appeal for permission to appeal. That application was still pending at the time of the instant hearing. E contended, inter alia, that the statutory demands should be set aside under the Insolvency Rules 1986 r.6.5(4)(a) as there was a genuine triable issue on the counterclaim.


Held, granting the application, that the question to be asked was whether the debtor had raised a genuine triable issue. The fact that a first instance judge had decided the issue to be too insubstantial to be allowed to be pleaded was an important factor in deciding whether the issue was genuinely triable, but it was not determinative. If an appeal process was ongoing, the court had to decide whether it was a real, as opposed to a frivolous, appeal. It was necessary to take into account the fact that an application for permission to appeal had been lodged and to assess whether the appeal the Names wished to pursue was bona fide and non frivolous. In the instant case, E's appeal could not be dismissed as frivolous or other than real and thus, it was appropriate to set the statutory demands aside.




Counterclaims, Lloyds Names, Negligent misrepresentation, Setting aside, Statutory demands


For E: J Callman. For L: D Bannister Q.C. and D Foxton


For E: Grower Freeman. For L: Lloyd's legal department


478/SD/02, 5208/SD/02, 516/SD/02, 503/SD/02

Sub nom

Thomas-Everard v Society of Lloyd's