James Culverwell acted for the appellants in the successful appeal of a decision to set aside statutory demands in the matter of AFP Assets Ltd v Hugill and Others [2025] EWHC 256 (Ch) heard by HHJ Kelly sitting as a Judge of the High Court. Hannah Laithwaite also appeared for the appellants at first instance and drafted the grounds of appeal obtaining permission from the appeal court.
The appellants, AFP Assets Ltd, are a finance company and had provided finance to the Respondents in relation to farming equipment under two agreements and livestock under a third agreement. The Respondents had fallen behind on repayments and had sold some of the livestock under the third agreement at which point concerns had been raised about the welfare of the livestock. The Respondents were given notice that they were in default of all three agreements. It was stated that failure to maintain the livestock, an unauthorised sale of livestock, and being in breach of other finance agreements were all grounds for termination of the livestock agreement.
Approximately a week later, the Appellants terminated the agreements. The notice in respect of the livestock agreement stated that it was due to the failure to adequately look after the livestock and due to the unauthorised sale. Statutory demands were served upon the Respondents for payment of the balances outstanding under all three agreements. Payment was made in respect of the two equipment agreements and the Respondents applied to set the statutory demands aside in respect of the debt arising from the livestock agreement.
At first instance, the District Judge decided that the Appellants could not rely on the breaches of the two equipment agreements as a basis for termination because that had not been stated in the final termination notice, and that there was insufficient evidence from either party as to whether the other breaches had been made out. The statutory demands were set aside.
On appeal, the High Court held that the District Judge was wrong to exclude the fact of breaches of the other two agreements from her consideration as it was open to a party to rely on facts which, although not stated in the termination notice, could justify the termination at that time (Reinwood Ltd v L Brown & Sons Ltd (2008) followed). It was also held that the District Judge had applied the wrong test in finding that the absence of evidence justified setting aside the demands. The Respondents (being the applicant at the time) had to satisfy the court that there was a genuine dispute on substantial grounds, or in other words, that there was a real prospect of successfully defending a claim for the debt. Applying that test, the court then found it was not possible on the evidence to conclude that the Respondents had complied with the provisions related to sale of livestock and thus the application should have been dismissed. Finally, it was held that the District Judge had erred in finding that she needed to see evidence of compliance with all of the requirements of the sale of livestock clause. It could not reasonably read to require compliance with all provisions; rather a breach of any of the requirements was sufficient.
The lower court’s order was set aside, the applications to set aside the statutory demands were dismissed and the appellants were awarded their costs of the appeal and below assessed on the indemnity basis.
To read the full judgment, please click here.