Helios Energia Ltd v IBM United Kingdom Financial Services Ltd

1. This is an application by notice dated 2 April 2025 by Helios Energia Ltd for an interim injunction to restrain the presentation or advertisement of a winding up petition against the company based on a statutory demand which is dated 29 January 2025, and is in the sum of £52,819.10. There is a document annexed to that statutory demand, annex A, which sets out the details of how the sum of £52,819.10 is arrived at.

2. The application is supported by the witness statement of Mr Florencio Cabrera Fernandez dated 2 April 2025. He is a director of the Claimant. It is opposed by a witness statement of Nicola Walling of the Defendant Company, IBM UK Financial Services Ltd, dated 24 April 2025. There is a separate cross-claim brought by the Claimant against the defendant by Part 7 Claim Form, to which I shall refer later.

3. I should say that, as is usual in cases of this kind, I am relying on the written evidence that has been submitted by the parties. No application was made to me for witnesses to be cross-examined, and therefore there has been no cross-examination. That does mean that there are certain limitations on whether or not or in what circumstances I am able to disbelieve what the parties say in their witness evidence.

4. The background to the matter is this. On 3 August 2023, Helios Energia and the Defendant Company, IBM UK Financial Services Ltd, which I shall shorten simply to “Financial Services” for convenience, entered into a document known as a master financing agreement. Financial Services agreed to lend money, in effect, to Helios Energia to facilitate the purchase by the company of certain IT services and software, and also to lease certain IT hardware to it. It is clear from this document and other surrounding documents that both the software and services and the hardware came from a another company called Recarta IT Ltd. In relation to the software and services, what Financial Services did was simply to lend the money to Helios Energia to pay for those software and services, but, in relation to the hardware, that was supplied by Recarta to IBM, who paid for the hardware and then leased it to Helios.

5. Under the master financing agreement, Helios Energia agreed to make 12 quarterly payments to Financial Services of £5,124.13, including VAT, from 1 September 2023. On 31 August 2023, Helios Energia signed a document called a certificate of acceptance. This acknowledged receipt of the products which said they had been delivered to Helios. It also stated that they were financed under the master financing agreement and that Financial Services was authorised to pay the supplier, Recarta, for the goods.

6. On 21 September 2023, however, a replacement certificate of acceptance was signed by Helios. It appears that the equipment first delivered had been substituted by Recarta because of some difficulties which had arisen in relation to it. This certificate appeared to confirm on its face that the issue of “mixing products” had been remedied, that the products had been delivered, that the products would be financed under the master financing agreement, and that the first invoice was to be paid, not on 1 September, but on 30 September 2023.

7. A number of invoices were then rendered to Helios Energia by Financial Services, to a total of about £15,000, none of which was paid. Now, under clause 7 of the master financing agreement, a failure of this kind to pay invoices is an “event of default”, and that entitles Financial Services to give 10 days’ notice to Helios to remedy. If it is not remedied, then Financial Services can treat the master financing agreement as repudiated, and can claim to recover all sums due under the master financing agreement, including any termination payment.

8. On 21 November 2024, so over a year later, Financial Services finally gave notice under clause 7. Helios Energia did not remedy the event of default as set out in that notice. Financial Services accepted what it said was the repudiation by Helios Energia, and now claims a total of £52,819.10, which is the subject of the statutory demand.

9. It is to be noted that for the purposes of this hearing Mr Cabrera, who is the Chief Executive Officer of the company, and who is not an English lawyer, represented the company as a litigant in person. He was, no doubt accidentally, trying to give oral evidence to me to supplement the written evidence. However, I must stick to the evidence which both sides knew of in advance. That is the written evidence that was served. As I have already said, there was no cross-examination, and in any event, Mr Cabrera was not giving evidence on oath. Accordingly, I am going to confine myself to the written evidence in this case.

10. I have seen a number of documents, including a written quotation given by Recarta to Helios for the products, and I have seen an invoice from Recarta to Helios in respect of the software and services. But I have not seen any invoice between Recarta and Helios. I have not seen what is said to exist, and that is a supply contract. Mr Cabrera confirmed to me that the supply contract had not been included in the bundle before the Court, which he prepared.

11. So, with that background in mind, I can turn to the law which governs the question of granting an injunction to restrain presentation of a winding up petition. Before I do that, I should just say that Mr Cabrera sought to help me by referring to a number of cases, decisions of the courts. Unfortunately, he did not realise that he should have brought copies. That slowed everything down a little while I tried to find the documents, the cases, to which he was referring. Even then, Mr Cabrera unfortunately could not refer me to the particular passages he was relying on, and although I tried to look for those passages, in most cases I was not able to find the statements in the judgments of the Court which supported the propositions he put forward.

12. Nevertheless, this is my understanding of the relevant law. A statutory demand having been served is a basis for presenting a winding up petition. This is because, first of all, section 122(1) (f) of the Insolvency Act 1986 provides that a company may be wound up if it is unable to pay its debts. Next, section 123(1)(a) provides that, if a creditor serves a statutory demand for at least £750 and the company does not pay the debt for at least three weeks, then in those circumstances, the company is deemed to be unable to pay its debts, whether or not it actually is. However, in the legislation for corporate insolvency, there is no provision for an application to be made to set aside a statutory demand if it is considered that it should not have been served. That is unlike the position in individual or personal bankruptcy, where there is such a provision.

13. So, an application instead has to be made to the Court, as Helios Energia has done here, for an injunction to restrain the presentation or the advertisement of a petition. The principles upon which the Court acts in such cases are set out in the well-known judgment of Norris J in Angel Group Ltd v British Gas Trading [2012] EWHC 2702 (Ch) . Paragraph 22 of that judgment says this: “The principles to be applied in the exercise of this jurisdiction, are familiar and may be summarised as follows. a) A creditor’s petition can only be presented by a creditor and until a prospective petitioner is established as a creditor he is not entitled to present the petition and has no standing in the Companies Court: Mann v Goldstein [1968] 1 WLR 1091 . b) The company may challenge the petitioner’s standing as a creditor by advancing in good faith a substantial dispute as to the entirety of the petition debt (or at least so much as will bring the indisputable part below £750): c) A dispute will not be “substantial” if it has really no rational prospect of success: in Re A Company No. 0012209 [of 1991] [1992] 1 WLR 351 at 354B. d) [the] dispute will not be put forward in good faith if the company is merely seeking to take for itself credit which it is not allowed under the contract: ibid. at 354F. e) There is thus no rule of practice that the petition will be struck out merely because the company alleges that the debt is disputed. The true rule is that it is not the practice of the Companies Court to allow a winding up petition to be used for the purpose of deciding a substantial dispute raised on bona fide grounds, because the effect of presenting a widening up petition and advertising that petition is to put upon the company a pressure to pay rather than to litigate, which is quite different in nature from the effect of an ordinary action: In Re A Company No 006685 [1996] [1997] BCC 830 at 832F. f) But the court will not allow this rule of practice itself to work injustice and will be alert to the risk that an unwilling debtor is raising a cloud of objections on affidavit in order to claim that a dispute exists which cannot be determined without cross-examination ( ibid. at 841C). g) The court will therefore be prepared to consider the evidence in detail, even if, in performing that task, the court may be engaged in much the same exercise as would be required of a court facing an application for summary judgment: ( ibid. at 837B).”

14. In addition to that statement of practice, it is also an abuse of process for a creditor to present a petition where there is a genuine and substantial cross-claim from the company. That is based on the decision in Coilcolour Ltd v Camtrex Ltd [2015] EWHC 3202 (Ch) at paragraphs 33 to 34. Lastly, I mention the judgment of Mummery LJ in Dennis Rye Ltd v Bolsover District Council [2009] EWCA Civ 372 , at paragraph 19, where the Lord Justice referred to a number of authorities, and then said: “The authorities are illustrations of the well established practice of the Companies Court, that if a company has a genuine and serious cross claim which is likely to exceed the petition debt, the court will normally exercise its discretion by dismissing the winding up petition and allowing the company the opportunity to establish its cross claim in ordinary civil proceeding. A company is not prevented from raising a cross claim in winding up proceedings simply because it could have raised or litigated the claim before the presentation of the petition or it has delayed in bringing proceedings on the cross claim. The failure to litigate the cross claim is not necessarily fatal to a genuine and serious cross claim defeating a winding up petition. However, in deciding whether it is satisfied that [the] cross claim is genuine and serious, the court is entitled to take into account all the relevant circumstances, such as the fact that a company has not even attempted to litigate the cross claim or that there are reasons why it has not done so.”

15. So, the question for me is whether in this case there is a substantial dispute in good faith, either about the debt itself, or in relation to a substantial cross claim, and, in either case, having a rational prospect of success so as to bring the debt down, if not to zero, then at least below £750.

16. The first point that it is important to notice in the present case is that Financial Services did not sell software and services to Helios Energia. Instead, it lent the money for Helios to buy those from Recarta IT. On the other hand, the second point is that, in relation to the hardware, Recarta did not sell the products directly to Helios. Instead, Recarta sold those products to Financial Services, which (I emphasise again) is not the same company as the main parent company, IBM. Financial Services then leased those products to Helios Energia, and the terms of that lease, as indeed of the loan, are governed by the master financing agreement.

17. Now that agreement contains a number of important terms and conditions which are exhibited to the witness statement of Ms Walling. I will refer to the most important of them. In the opening words of the agreement, the defendant, Financial Services, is defined as “IGF”. Paragraph 4.1.1 provides that: “The rights and obligations of Client in relation to the Lease are set out exclusively in this Agreement, and the Transaction Document. The rights and remedies of Client and the obligations of the Supplier are set out exclusively in the Supply Contract in relation to Equipment and Services. The Supply Contract continues to apply in all respects other than IGF’s assumption of the obligation to pay for Products and title to Equipment passing to IGF on such payment. It is acknowledged that while IGF is not liable for Product performance or Product related issues, nothing in this Agreement or any Transaction Document shall affect any remedies Client may have against the Supplier.”

18. The next particular clause I need to draw attention to is 4.3.1: “Title to the Equipment will transfer from the Supplier to IGF on payment by IGF of the Supplier’s invoice and will remain with IGF throughout the relevant term. If, for any reason, Client does acquire title other than IGF passing title to Client for types LPO, LPO1 and LPO2, Client shall transfer such title to IGF immediately and agrees to take such further actions as may be required to protect IGF’s ownership against claims arising directly from Client’s possession of the Equipment.”

19. And then clause 4.4.1 provides: “The following representations shall be made before and shall continue during the Term of Lease(s): 1) IGF represents and warrants to Client that it will not interfere with Client’s quiet enjoyment of use or possession of the Products unless there is an Event of Default or upon termination of the relevant Lease. 2) Client represents and warrants to IGF that in relation to Products that are or will be described in Transaction Documents, a) it will select Products, accept responsibility for their use and the results obtained therefrom, and b) Products will be used primarily for business purposes. 3) Client acknowledges that no other condition, warranty, or representation of any kind, except as expressly stated herein, is given by IGF in relation to Products.”

20. 4.4.2 provides: “All conditions and warranties, express or implied, statutory or otherwise, made as to the condition, quality, or description of Products, or as to their purpose, are expressly excluded by IGF.”

21. And then lastly, I need to refer to clause 9.2. This provides that: “Neither Party shall be liable for any loss of business or consequential damage, indirect or other arising from breach of this Agreement or any Transaction Document, except this shall not exclude any liability in respect of death or personal injury resulting from the negligence of either party, its employees or agents. IGF shall not be liable for any claim, damages or loss arising from the Products.”

22. At common law it was open to the parties to a contract, to contract and undertake whatever obligations they chose within certain public policy limits. They could provide that obligations did or did not arise in such circumstances as they agreed. They were also able at common law to exclude liability for breach of any obligations which did arise.

23. Now the master financing agreement does, or purports to do, both of those things. So far as concerns the products, they are the subject of a lease, and so I do not need to look at the Sale of Goods Act 1979 . This is not a contract for the sale of goods to Helios Energia. Instead, it is a contract of lease. On the other hand, the Supply of Goods and Services Act 1982 can apply, because under section 6 of that Act it applies to a lease of goods.

24. However, although sections 7 to 10 of that Act imply certain terms as to quality, fitness for purpose, and so on, into such a contract of hire or lease, section 11 of that Act provides that the parties can, by their contract, exclude such implied terms. That is, as I understand it, exactly what clauses 4.4.1 and 4.4.2 of the master financing agreement seek to do. But that is not the end of the story, because there is also the question of the Unfair Contract Terms Act 1977 to take into account.

25. The important section of the 1977 Act is section 3 . Under sub section (1 ), it is provided that this section applies when one person deals with another on the other person's written standard terms of business. On the face of it, that is exactly this case. Then subsection (2) provides broadly that the person who is relying on the standard terms of business (in this case, Financial Services) cannot (a) exclude liability for any breach of contract, or (b) claim to render (i) a performance which is substantially different from that reasonably expected, or indeed (ii) no performance at all, except in so far (in any of these cases) as it is reasonable for Financial Services to do so.

26. Now, if Financial Services had committed any breach of this contract, this provision would undoubtedly have an impact on clause 9.2 of the master financing agreement, because clause 9.2 seeks to limit Financial Services’ liability for loss of business and consequential damage. In order to rely on clause 9.2, Financial Services would need to show that it was reasonable for it to seek to rely on that provision. The question whether it was so reasonable was discussed briefly in argument before me. My current view is that it was reasonable in the circumstances, because the purpose of the agreement was financing rather than retail, it was a commercial contract between business people, and Helios Energia still has all its remedies against Recarta. However, in the circumstances of this case I do not need to decide that point.

27. Let me just say why that is so. Clause 4 of the master financing agreement does not operate to restrict liability for breach of contract. What it does is to reduce the obligations of Financial Services under the contract. So, section 3(2) (a) of the 1977 Act does not apply because, if clause 4 applies, then Financial Services was not in breach of contract. Section 3(2) (b)(i) deals with the question where a performance substantially different from that reasonably expected has taken place. But that does not apply here, because Financial Services bought from Recarta goods which were selected by Helios Energia , and paid for them, and then immediately leased them to Helios Energia. Financial Services had no choice in the matter. In my judgment, Financial Services has done exactly what was expected of it, neither more nor less. What Financial Services has not done is to undertake liability for anything that Recarta might have done wrong in selling the goods. But that is no part of the master financing agreement, and it cannot reasonably have been expected by Helios Energia.

28. However, notwithstanding the terms of the agreement between the parties, Mr Cabrera, on behalf of Helios Energia, argued that the doctrine of promissory estoppel applied in this case, and that in essence, Financial Services had agreed to vary the terms of the contract. The problem for Helios Energia is that there is nothing about this in Mr Cabrera's witness statement, and that is the evidence which I have before me. Even if I assume the truth of everything he says in the witness statement, that does not help him to show what variations were made and when they were made. The mere fact, for example, that Financial Services did not insist on, let us say, one aspect of its strict rights (such as payment of an invoice on a certain date), does not mean that Financial Services thereby agreed to give up any other rights it might have.

29. If you are going to put forward a defence based on some kind of promissory estoppel, you must give proper evidence of what promises were made, when they were made and what the effect of them is. The fact that Recarta agreed to substitute the equipment or to provide other extra assistance is irrelevant in considering the liability of Financial Services, unless, of course, Recarta is merely the agent of Financial Services. I will come back to the question of agency.

30. Let me now turn to the claim, the cross-claim, if I may put it that way, as formulated by Helios Energia in the Part 7 claim form which it issued on 8 April 2025. I note, incidentally that this is issued in the Circuit Commercial Court, rather than in the Companies Court. That is not inappropriate, because it is a business transaction and that is what the Circuit Commercial Court is concerned with. Nevertheless, I note that it is in a different list, and it is not before me today, sitting here in the Companies Court.

31. It is a claim in which three causes of action are put forward by Helios Energia against Financial Services. The first, which is dealt with at paragraphs 14 to 17 of the particulars of claim, is negligent misrepresentation. The second, dealt with in paragraphs 18 and 19, is fraudulent misrepresentation as an alternative to negligent misrepresentation. The third cause of action, dealt with at paragraphs 20 to 22 is a simple claim of breach of contract.

32. So far as concerns the first, the misrepresentation, what it says in paragraphs 14 and 15 is: “14. The Defendant directly and via its agent Recarta, made statements of fact about the service, condition, age, specification and fitness for purpose that were false.

15. Those representations induced the Claimant to enter into the agreement.” I do not need to read the rest for present purposes,

33. Secondly, paragraph 18 simply says: “In the alternative, the representations were made fraudulently.” I do not need to read any more about that.

34. Then, thirdly, in the breach of contract claim, paragraph 20 says: “The agreement between the Claimant and Defendant included the following express and or implied terms: a) that the server would conform to its description as new and fit for purpose, b) that the server would be of satisfactory quality, Sale of Goods Act 1979 section 14 , c) that it would be supported by proper licencing and warranties.” And then there is a claim that those terms were breached.

35. Now as to the first two causes of action, both based on essentially misrepresentation, the problem for Helios Energia is clause 4.4.1(3) of the master licencing financing agreement. This provides: “Client acknowledges that no other condition, warranty or representation of any kind, except as expressly stated herein, is given by Financial Services in relation to Products.”

36. So Helios has acknowledged that there are not any other representations. So far as the third cause of action is concerned, it relies on the Sale of Goods Act 1979 , but as I have already said, the Sale of Goods Act does not apply because this is not a sale; it is a lease. Even if a reference to the Sale of Goods Act were substituted by a reference to the Supply of Goods and Services Act 1982 , it would still make no difference because the implied terms under that Act can be excluded under section 11 , and that is precisely what these provisions of the master financing agreement have sought to do.

37. Now, Helios Energia alleges in the claim form, as I have already said, that Recarta is an agent of Financial Services. When I asked Mr Cabrera what documents he relied on to show that, he referred me to the advices of delivery, which undoubtedly show, or mention, both IBM, the parent company, and Helios Energia. One shows where the equipment comes from, and where it is been manufactured, and the other shows where it is being delivered to. It is interesting that there is no mention of Recarta in those documents. I cannot see them as demonstrating that Recarta were in any way acting as an agent of Financial Services.

38. Moreover, it is right to point out that the IBM parent company and manufacturing. company in the United States is a different company from Financial Services, which is a UK company. So in my judgment, I can find nothing in the documentary evidence to support the allegation that Recarta is an agent of Financial Services.

39. On the other side, we have the witness statement of Nicola Walling at paragraphs 5 to 7, which provides as follows: “5. Recarta IT Ltd is a private limited company with company number [and then it gives it] It has a registered office address [which it gives] Recarta and the Respondent are neither intragroup nor connected companies. The copy of a company search for Recarta IT Ltd shareholding is attached which includes the last confirmation statement with updates and which shows that the shareholders are three individuals.

6. In relation to products, IBM United Kingdom Ltd and Recarta are parties to an IBM business partner agreement under which Recarta are permitted to market certain IBM United Kingdom Ltd products to end clients and to act as a reseller when selling those products to end clients. There is no agency relationship and Recarta does not have any authority to bind or contract on behalf of any IBM company, whether the Respondent [that is Financial Services] or otherwise.

7. In relation to financing matters, Recarta are authorised to market the Respondent’s financial financing services to end clients although any financing agreements are entered into directly between the Respondent and the end client, which in this matter is the Applicant. No agency agreement exists between the Respondent [that is Financial Services] and Recarta.”

40. And then of course there is also clause 4.1.1 of the master financing Agreement, which I have already read out. This makes plain that the relationships between Helios Energia on one hand, and Recarta on the other, are entirely distinct from the relationship between Helios Energia and Financial Services, because they depend upon entirely different contracts. There is a reference made in that clause to the supply contract between the supplier, that is Recarta, and the client that is Helios Energia, but Helios Energia has not produced the supply agreement to the Court, and therefore, nothing contained in it can be taken into account in this application.

41. So, in these circumstances, and for the purposes of today's application, I cannot treat the allegation that Recarta is an agent of Financial Services as having any real prospect of being proved. In my judgment, therefore, there is no rational prospect of success for Helios Energia on this cross claim. It is not therefore necessary for me to go on and consider what would be the position if there were any rational prospect of success, although it is said by Financial Services that the evidence is not strong enough to demonstrate that the cross-claim has a value exceeding the debt upon which the statutory demand was based, and I do not do so.

42. If, at the end of the day, Helios Energia has a remedy for the situation in which it finds itself, it is a remedy against Recarta and not Financial Services. I do entirely understand that Helios Energia would prefer to go against Financial Services rather than Recarta, but this transaction, in my judgment, has been so structured that Financial Services simply does the financing, but does not get involved in the retail supply.

43. So, on the evidence before me today, Financial Services has established that it is a creditor of Helios Energia for more than £750, and therefore, has standing to present a winding up petition, and therefore, accordingly in my judgment, this application for an injunction must fail, and it is therefore dismissed. (proceedings continue)

44. Mr Cabrera asks for permission to appeal against my decision. Under the relevant rules, I can grant permission to appeal only if I am satisfied that there is a real prospect of success on the appeal, or if there is some other compelling reason for giving permission. In my judgment, this matter turns entirely on the facts of the case and does not turn on any question of law, and there is no real prospect of a successful appeal. Secondly, I can see no other compelling reason for an appeal. Therefore I dismiss the application. The company has the opportunity to renew its application for permission to appeal directly to the Court of Appeal. (proceedings continue)

45. Well, given that you have not made any substantive response, I will simply deal with the application. In principle, the rule is that where a party is successful, the unsuccessful party is ordered … (proceedings continue)

46. Miss Edwards has applied for her costs in relation to this matter. As a matter of principle, costs are in the discretion of the Court, but the general rule is that where one party has been successful, then the costs if awarded will be awarded to the successful party and against the unsuccessful unless there is some reason not to. In this case, I can see no reason not to award costs to the successful party and that is Financial Services. Now there is the question of the assessment of those costs. This Transcript has been approved by the Judge. The Transcription Agency hereby certifies that the above is an accurate and complete recording of the proceedings or part thereof. The Transcription Agency, 24-28 High Street, Hythe, Kent, CT21 5AT Tel: 01303 230038 Email: [email protected]