Stat Demand Bermans

[Iannun]

Please help!

 

I stood as guarantor for a factoring company (Bibby) for my business which failed. The factoring company has security on the debtor book to the tune of £150K, but are claiming £70K from me (£43,000 what they are owed and the rest in charges). They have made no attempt to collect the money from the debtors, but have just resorted to going for me.

 

Tonight I have just received a stat demand from Bermans (not the normal court form, but their own version).

 

I am beside myself with this. They have all the correct wordings but no court stamp. I am really down on my uppers, I am on income support and have no money to go to a solicitor to try and get it set aside.

 

Any help would be appreciated.

[rory32]

The statutory demand is not a court document so wouldn't have a court stamp. What form have you been issued (it should say at the top of the form) and what does the statutory demand state?

 

How was the statutory demand served/delivered?

 

Are you a homeowner?

[Iannun]

It was delivered by hand. I am a home owner, but having just checked on Zoopla, the value is less than what I paid for it and have a mortgage for.

 

 

 

 

 

I have blanked out the personal details and amounts.

Edited November 20, 2008 by Iannun
Removed attachment

[Josie8]

In Part A does it give you the name of your local court and its address?

[Josie8]

Was the business a limited company or a proprietorship?

[Iannun]

Part A gives the local court name and address.

[Iannun]

The business was a limited company, I gave the guarantee as a director. The business failed because Bibby pulled the funding.

[Josie8]

The business was a limited company, I gave the guarantee as a director. The business failed because Bibby pulled the funding.

 

 

Did the company pay for independent legal advice at the time for you?

[Iannun]

No, we were told by the business manager that she could never remember when they came onto someone for the guarantee. The have first charge on the debtors but have not chased anyone for payment. They just came to me.

[rory32]

First thing to note is that a statutory demand should only be issued where there is no dispute over the amount owing. There are obviously considerable charges on the account and I think it would be only prudent to know how these are made up so that you can then dispute the amount owing.

[Iannun]

Bibby last week said they would accept £50K as the owed amount is now only £41K they have applied cancellation charges for the year.

 

They will not talk to me and the solicitor is working of figures a month out of date. I collected £4000 in this week and paid it to Bibby so the figures are wrong. The relationship with the factor company only ended on the 3rd Oct, they have taken this action in just four weeks.

[Factoring Solutions]

Are the debts collectable. If so I would advise you to do your utmost to ensure that Bibby are paid as all they are interested in is getting their money back.

 

It is unusual for a factoring company to "pull" it's funding and follow that up with a stautory demand unless there are extenuating circumstances.

 

Did you bank any cheques that were due to them ?

[Iannun]

No, I did not cash any cheques. There were a couple queries regarding one or two invoices that had been to the wrong company. One debtor owes over £70K and is holding out for a discounted settlement. The factoring company has not chased any of the debts, even though I have correspondence stating that is what they do in every case.

 

The account manager at the factoring company has told me that I should lose my house over it and she does not want me to get "Scott free" away. Well I have not, I lost my job, business, car and own money. So I would not describe that as "Scott free". She has told a third party that she is gunning for me.

[Factoring Solutions]

The account manager at the factoring company has told me that I should lose my house over it and she does not want me to get "Scott free" away. Well I have not, I lost my job, business, car and own money. So I would not describe that as "Scott free". She has told a third party that she is gunning for me.

 

That is scandalous and I have never heard of Bibby or any other factoring company acting in this aggressive manner except when they think that their client has defrauded them.

 

I do have a relationship with Bibby although not their Yorkshire office and if you want me to try and make some discreet enquiries to find out why they acting in this manner I am more than happy to do so.

[surfaceagentx20]

I note the demand describes the creditor as Bibby Financial Services Limited (BFSL). The demand purports to advance a transaction under which there was imposed upon you a liabiility to answer for the obligations of XYZ Limited to Bibby Factors Yorkshire Limited (BFYL) by reason of your guarantee to BFSL to answer for the failure of XYZ to pay BFYL.

 

It would seem you did not guarantee to BFYL that XYZ would pay BFYL in return for BFYL carrying out services for XYZ. Rather, you guaranteeed this to BFSL.

 

There does not at first blush appear to be any consideration or benefit moving from or conferred by BFSL on you in return for the guarantee you gave to them. Likewise there does not appear to be any benefit conferred by BFSL on some third party. The facts suggest the possibility of some sort of Tweddle v Atkinson or similar type Defence. I'd be looking into this angle as well as any others available.

 

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[Iannun]

Thank you for the advice. I have listed me defence to have the demand set aside. Can anyone tell me if this is OK, or should I add to it?

 

1. The Statutory demand is defective because it does not show the appropriate County Court to which an application to set aside should be made.

2. The demand is made up of a considerable sum in cancellation charges which are disputed.

3. The claimant is in breach of their written offer insofar as to pursuing other debtors first.

4. The sum claimed in wrong as payments have been made on the account.

Can I also list the Tweddle v Atkinson defense for the consideration?

Edited December 3, 2008 by Iannun

[42man]

I'm not too up on commercial debt stat demands but as for the disputed charges you could possibly put - The Defendant denies that he is liable to the Claimant as alleged in the Particulars of Claim, /at all. It is averred that the Claimant has failed to serve a Notice of Assignment in accordance with section 136(1), of the Law of Property Act 1925, in respect of the alleged debt. The amount detailed in the Claimant’s claim, which is likely to include penalty charges, which are unlawful at Common Law, Dunlop Pneumatic Tyre Company Ltd v New Garage and Motor Company Ltd [1915], under The Unfair Contract Terms Act 1977 and The Unfair Terms in Consumer Contracts Regulations 1999

[Iannun]

Again, thank you for your help. This is such a wonderful site. I was in total despair over this and the help I am getting is pulling me through.

[42man]

The 'assignment' piece probably isn't relevant as it would seem the stat demand is not being issued by a debt collection agency...

[42man]

Just this I think is more relevant, but again as I said my knowledge of commercial debts is limited.. - The amount detailed in the Claimant’s claim, which is likely to include penalty charges, which are unlawful at Common Law, Dunlop Pneumatic Tyre Company Ltd v New Garage and Motor Company Ltd [1915], under The Unfair Contract Terms Act 1977 and The Unfair Terms in Consumer Contracts Regulations 1999

[surfaceagentx20]

My thoughts:

 

[1] is OK so far as it goes but is a mere irregularity of procedure rather than a Defence to indebtedness

 

[2] is OK in so far as it may operate to reduce the level of the debt. However, it is essential to show that the amount properly in dispute reduces the amount not in dispute to a sum below the bankruptcy level which is £750.00. Give evidence of the extent of the cancellation charges and why the charges are disputed.

 

[3] The Claimant (shoud be 'creditor') can not be in breach of an offer. In fact no one can. Breaches occur in the performance of an agreement not in the making of an offer. I have not seen the writing but suspect that what you are referring to is some form of promise or undertaking from the creditor or may be BFYL, to come after you after it has gone after others. They type of Defence I believe you are alluding to is known as promissory estoppel. In short you should advance the defence that the creditor issued the promise to pursue others before you and that in reliance upon that promise you have acted to your detriment. The detriment would be a decision in reliance not to arrange your finances so as to be able to meet the demand now made and/or to compel so far as you may be or may have been able to compel those others to discharge their indebtendess.

 

[4] See [2] above.

 

Further thoughts:

 

Assuming there is some value in the contention I raised earlier, I would be minded to argue by way of Defence that the guarantee is unenforceable against you on the grounds that the formation of it did not provide for any benefit to be conferred by BFSL on you and/or any third party in return for the guarantee promise you gave.

 

Contracts are bargains and it is an essential feature of bargain that there is benefit and detriminent, together known as consideration. If I sell you my pencil for £1.00, I suffer the detriment of losing the pencil and gain the benefit of your £1.00. Conversely, you suffer the loss of your £1.00 and gain the benefit of my pencil.

 

Extending that a little further, in a guarantee situation, in return for the offer of the guarantee, the guarantor gains the benefit of the promise of the guarantee to deliver goods or services to a third party and suffers the detriment of an obligation to pay to the guarantee such sum as the third party may fail to pay for the goods or services provided by the guarantee.

 

In your situation, the guarantee is to BFSL, but BFSL are not suppliers of services to XYZ, BFYL are. Nor are BFSL entitled to receive payment for those services, again BFYL are. In those circumstances what benefit do either you or a third party for that matter, enjoy in return for the promise to BFSL?

 

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[Iannun]

I have reworked it. How does this sound?

 

1. The Statutory demand is defective because it does not show the appropriate County Court to which an application to set aside should be made. (the court named on the demand does not deal with it, the nearest one that does is Coventry)

 

2. The demand is made up of a considerable sum in cancellation charges which are disputed wholly. The Creditor is negotiating with debtors to settle the outstanding balance fully and the issuing of a Statutory demand is an abuse of process. (I have a letter that says if you sign up with us, the guarantee ending on you is so remote. We go for the debtor book first as there is more than enough head room, then we take assets, then we will assist you in setting up again, rescheduling the debts in the new company, if all these fail we may seek you to honour the guarantee.)

 

3. The Creditor calculates the sum owed including termination charges referring to clause 7.5 and 15.4 of the Standard Conditions to the Factoring Agreement. This clause refers to a repudiation of the agreement by the company. No such repudiation or termination from the company’s side has occurred, therefore cancellation charges for not enforceable. The amount detailed in the Creditors claim, which includes penalty charges, are unlawful at Common Law, Dunlop Pneumatic Company Ltd v New Garage and Motor Company Ltd [1915], under The Unfair Contract Terms Act 1977 and The Unfair Terms in Consumer Contracts Regulations 1999

 

4. The Creditor is in breach of their written offer insofar as to pursuing other debtors first. The Creditor has given a written undertaking and is in negotiation with a debtor(s) to settle the disputed sum in full. The Creditor is in breach of a Promissory estoppel, {Justice Denning; Central London Property Trust Ltd v. High Trees House Ltd [1947]}

 

5. The sum claimed in wrong as payments have been made on the account.

 

6. Guarantee is unenforceable on the grounds that the formation of it did not provide for any benefit to be conferred by Bibby Financial Services Limited on me and/or any third party in return for the guarantee promise I gave. Furthermore, the guarantee is to Bibby Factors Yorkshire Limited, not Bibby Financial Services Limited. Bibby Financial Services Limited are not entitled to receive payment for those services, against Bibby Factors Yorkshire Limited Tweddle v Atkinson (1861) 1 B&S 393}

 

 

In a nut shell the situation is that there is around £150K owed to bibby by the former companys creditors. Bibby are owed circa £41K, they only have to collect in a third of the book to be paid. The Solicitor I saw said that they would go for me as I am a nice easy target.

 

I am totally confused regarding this matter. I have been to see a solicitor, who said that there are grounds to have it set aside and even defend it at a hearing. My problem is that I do not even qualify for benefit and have not got the funds to pay a solicitor. The local CAB will see me on Friday, but I need to have the set aside application in by then.

 

Please feel free to alter it into a form that will be more acceptable to the court. I thank you all for your help. I cannot thank you enough for the assistance.

Edited December 3, 2008 by Iannun

[Factoring Solutions]

I would be minded to argue by way of Defence that the guarantee is unenforceable against you on the grounds that the formation of it did not provide for any benefit to be conferred by BFSL on you and/or any third party in return for the guarantee promise you gave.

 

Contracts are bargains and it is an essential feature of bargain that there is benefit and detriminent, together known as consideration.

 

My factoring law is many years out of date but in my day all personal guarantees used to start "In consideration of your agreeing to offer a factoring facility to XYZ Ltd" and the consideration was that the factor would not offer a facility unless the personal guarantee was given.

 

Nowhere in the legal documents would it mention any order in which the factoring company would look to recover it's investment although in this case it would seem that Iannun may have a letter written by the factoring company that could prove useful in establishing that his guarantee would only be invoked when all other options had been exhausted.

[Iannun]

I have just typed the letter that they gave me in order to get me to sign up:

 

 

Please find detail of points discussed yesterday.

 

6 month Guarantee:

Assuming you are not in breach of the agreement, If, in the first 6 months of the period of the Agreement, you are dissatisfied with our services then you shall notify us in writing of the reasons for your dissatisfaction, and afford to us not less than 30 days in which to address your concerns. If after such period of 30 days you remain dissatisfied with our services then you may request immediate termination of the Agreement and we shall accept such request provided that:-

 

you repurchase all Debts then Outstanding and pay in full to us the repurchase price equivalent to the total of notified amounts of those Debts; and

you confirm to us in writing that after such repurchase we shall have discharged all our obligations to you under or in any way connected with the Agreement

The payment of the repurchase price of each debt shall be treated by us as its Collection.

 

Guarantee Clarification:

In the event of business failure, our normal course of action to regain outstanding monies would begin with the collection of book debts as there should be sufficient head room in the facility to recover our exposure

 

Should a worse case scenario arise and the company cease to trade, we normally assist with the management of Company demise through Administration for the benefit of all stakeholders which would include all Directors/staff/shareholders/creditors.

This maximises the potential strategies for keeping the business going for the benefit of all stakeholders

In over 50% of cases of company cessation we assist the directors to start a new company and in the unlikely event of a shortfall on the previous business we look to recover any shortfall on the old company from the future trading of the new company in line with cash flow projections. This tried and tested strategy delivers business continuity and prevents recovery under personal indemnity.[/font]

However, we do reserve the right to commence indemnity action against individuals which I am sure you will understand.

 

Would this be sufficent to lodge the (they should go after the debts first defence)? They cancelled the agreement on the 30th September, put me on notice on the 7th Oct and then issued this demand.

[surfaceagentx20]

FS,

That is how I understand the position. In other words, in the ordinary way of setting up the factoring, the factoring company agrees to offer factoring services to XYZ in return for the guarantor's promise that if XYZ should default in its obligations to the factoring company, the guarantor will stand in XYZ's shoes.

 

The thing with the guarantee in question is that that the factoring company is not the beneficiary under the guarantee. Further, that the beneficiary under the guarantee evidently provides no services to the guarantor or to XYZ in exchange for the guarantee. This is what is so mystifying to me.

 

Iannun,

I'll look at your re-worked Answer shortly but in the meantime and with reference to the letter you posted, who are 'We', 'Our' and 'Us'? I suspect your answer will be BFYL, not BFSL but I sure would appreciate the clarification.

 

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