The High Court has ordered Abbey Trinity Retail Limited to be wound up after rejecting its challenge to a €59,576 service-charge debt claimed by Abbey Trinity Management Services Limited for a supermarket unit at Tuam Shopping Centre in County Galway.
In a judgment delivered on 11 January 2010, Miss Justice Laffoy found that the company had not disputed liability for the debt on substantial grounds. She also said she was not satisfied that the challenge was made in good faith. The company was deemed unable to pay its debts after failing to pay, secure or settle the demanded sum within three weeks.
The petitioner had presented its winding-up petition on 10 November 2009. It said the debt covered service charges for the second, third and fourth quarters of 2009. The company argued that the amount was disputed, that it lacked information explaining the calculation and costs, and that the lease required disputes to go to arbitration. It sought dismissal of the petition or a stay pending arbitration.
The judge held that the lease made the petitioner’s estimate of advance service-charge payments binding, and that the estimate did not fall within the arbitration clause. She said the relevant test was whether the company disputed liability in good faith and on substantial grounds. The company had not claimed an offset for an overpayment in a previous year, which the judge identified as the only conceivable basis for disputing the amount under the lease. A document before the court showed that the company’s share of 2008 actual costs marginally exceeded the amounts invoiced, excluding VAT.
The judgment also records that the company had paid €60,690 towards service charges since January 2009, most of which the petitioner said related to earlier arrears. The company first disputed the 2009 estimates in writing on 5 November 2009; it invoked arbitration on 3 December, when the petition was due for hearing.
In considering whether the company’s challenge was bona fide, the judge also noted evidence of rent arrears claimed by the landlords, which exceeded €170,000, and the company’s 2008 financial statements. Those statements showed a €3,010,519 deficiency of assets and disclosed significant doubt about its ability to continue as a going concern, while the directors said they expected it to continue operating.
The court concluded that the company was deemed unable to pay its debts and that the proper exercise of its discretion was to make a winding-up order. The judgment does not record a separate order on the company’s alternative request for a stay.