The High Court has dismissed a winding-up petition against Cotton Box Design Group Limited arising from a disputed apartment fit-out contract in Ballinasloe, County Galway.
Earls Construction Company Limited had claimed Cotton Box was insolvent after it failed to comply with a statutory demand. The dispute arose from an October 2007 agreement to fit out 46 apartments at a development in Ballinasloe.
Earls maintained that it had overpaid Cotton Box and ultimately put the alleged overpayment at €172,438.28 including VAT. Cotton Box denied owing anything. It claimed instead that Earls still owed money on issued invoices and was also liable for damages for allegedly preventing it from completing the remaining work.
Ms Justice Laffoy said the central question was not whether Cotton Box could demonstrate its general solvency. It was whether Earls was genuinely a creditor in respect of an undisputed debt. A winding-up petition cannot ordinarily be used to enforce payment where liability is disputed in good faith and on substantial grounds.
The evidence showed major disagreements over the meaning of the original contract, whether revised costings had been agreed in December 2007 and whether payments made by Earls amounted to overpayments. Cotton Box said revised prices applied after surveys and additional work. Earls disputed that the contract had been varied.
The judge said those factual conflicts could not be resolved on the interlocutory application. She found Cotton Box had established at least a prima facie case that continuing with the winding-up petition would amount to an abuse of process.
The court therefore restrained further prosecution and advertising of the petition and ultimately ordered that the petition be dismissed.
The ruling did not decide which company was correct about the underlying contract or who ultimately owed money. Those issues required ordinary plenary proceedings, where disputed facts and contractual questions could be fully tried.