Statutory Demand Issue & question

[Eshezo]

Hi all,

 

I know there is alot on Stat Demands here and I hope I'm not duplicating but I need some advice.

 

I own a Ltd company and with one of the suppliers I also have a personal guarantee for the account.

 

We stopped dealing with this particular supplier some months ago due to bad service and goods consatntly arriving damaged, the company agreed to supply goods in compensation and never did in addition they owe a credit on some other goods.

 

They have been chasing for final payment over the last few months and we have exchange alot of corrispondance with me fully explaining the dispute and even supplying internal names of those that agreed credits etc...

 

so the final account due is still being disputed in regard to the actuall amount payable.

 

The invoices are made up of many small amounts (£30-£150) with a total amount of £4007 (according to them) but this includes £40 charge on each invoice for late payment rather than the late payment charge being calculated on the whole amount, anyway the debt is actually more like £1500 .

 

They have issued a Statutory Demand dated the 18th Nov but delivered on the 27th Nov despite my corrispondance disouting and asking them to look into the queries.

 

On the demand they also say that the company is now in "Compulsory Liquidation" which it isn't and the Statutory demand is issued to me personaly as the guarantor.

 

Shurley if they really don;t want to resolve the queries and believe that they are owed this amount they should persue it through the county court with the company first or atleast issue some type of action on the comany before shoving a Statutory demand on me personally ?

 

I'm planning to have it set aside but still have some questions....

 

1/ The fact that the date is the 18th Nov on the paperwork and the service date was the 27th, can they persue anything further based on the paperwork date , ie should I panic to get the set aside in by Monday ?

 

2/ Any ideas on the view of the court with this, ie are they likley to set it aside or am I in a big deep hole ?

 

I can let anyone have any detailed info if more is required, just post here and I'll put it up.

 

Thanks in advance for anyones advice.

 

rgds

[the_shadow]

Hi Eshezo, I'm afraid I cant answer your question as I'm not sure myself about stat demands and businesses but I'll move this over to the legal section where you may get a better response.

 

S.

[martin g]

Good evening,

 

In answer to your questions

1/ The 18 days run from the date of service, it would be sensible to put in your set aside statement that it came into your hand on the 27th.

2/ The insolvency courts are not a short cut to settle a dispute, this the function of a County Court. Insolvency judges hate this kind of thing and I would urge you to put in a claim for your costs. The standard litigant in person rate is £9.25 per hour but I have seen, on this forum, the self employed and directors claiming their professional rate £80/ hour or so and the judge agreeing, especially if the claim is vexacious.

IMO if the invoices were made out to your limited co. and it is still trading you have a complete defence, more so if the account is disputed and you have a paper trail.

Lastly, I worked for a company that included a personal guarentee as part of the account opening process, howeve the co;s solicitors were certain that it would not hold up in court. It was quite useful though to twist the arm of slow payers.

Martin g

[Eshezo]

Thanks for that, I'm planning to put the set aside foward next week.

 

Could you expand on the personal guarantee part where you say the Co didn;t think it would stand up anyway ?

 

It's very frustrating that they have taken this avaenue because I do have a good paper trail of letters and responses that just do not address the issue.

 

rgds Shaun

[martin g]

Good Morning,

The co. I worked for put the statement in as part of the signature box to open the account. their solicitors felt that it should be a separate, discreet box/ statement with it's own signature so that the applicant was fully aware of the commitment.

Without seeing the document you signed I would not like to comment.

However, the only thing that you have to demonstrate to the judge is that a " triable issue" exists and that the SD is an abuse of process because the case should be put before a county court judge who can assess the case and order full disclosure of all the documents/ invoices/ statements/ return notes/ etc.

Put " a triable issue exists" a few times in your statement.

You need to put the claimant to strict proof that your co. is in liquidation and demand from them full details of how they established this "fact", this is the reason they have issued an SD so they need to put up or shut up. Obviously a letter from your bank or accountant or even a bank statement or VAT demand would prove you are still trading.

Lastly the £40 charge is a unfair penalty and would not be upheld by a court, a further "triable issue" and for this reason alone the sum claimed will be incorrect and should negate the SD.

Martin g

[nicklea]

HI, I was in a similar situation to you a couple of years ago.

 

What marting says above is correct. As the company is still trading and the debt is disputed then they should not be using the insolvency process, this is from Hammonds (a firm) v Pro-Fit USA Ltd [2007] EWHC 1998 (Ch):-

 

http://www.bailii.org/ew/cases/EWHC/Ch/2007/1998.html

 

[27] So far as disputed debts are concerned, the practice of the court is not to allow the insolvency regime to be used as a method of debt collection where there is a bona fide and substantial dispute as to the debt. Save in exceptional cases, the court will dismiss a petition based on such a debt (usually with an indemnity costs order against the petitioner).

 

In addition, it is definitely a triallable issue as to whether or not you are a consumer and so the UTCCR and UCTA applies to you. In my case the judge said that this is an argument he hears regularly in the county court and so is clearly a triallable issue:-

 

First of all, UTCCR and the relevant bit of UCTA only applies if you are acting as a consumer. A consumer is basically defined as anybody who isn't in business connected with the contract. I said that my business or profession was not that of being a guarantor (I don't go round providing guarantees to people for a living) and that this guarantee was just a personal matter between me and the company. As a result UCTA and UTCCR applies. Actually there is a lot of case law in this area, look for example at R & B Customs Brokers Company Ltd v United Dominions Trust Ltd [1987] EWCA Civ 3, [1988] 1 WLR 321, [1988] 1 All ER 847

 

See these two links for some details about my experiences:-

 

http://www.consumeractiongroup.co.uk/forum/showthread.php?137495-Statutory-Demand-and-set-aside-application&p=1481216&viewfull=1#post1481216

 

http://www.consumeractiongroup.co.uk/forum/showthread.php?137495-Statutory-Demand-and-set-aside-application&p=1485773&viewfull=1#post1485773

 

It may also make a difference whether you signed as a director of the company or not. However as I didn't sign the gurantee in my capacity as a director I didn't look into this angle

[nicklea]

This is my initial thread about the subject with some details of the letters I sent and what I put in my application

 

http://www.consumeractiongroup.co.uk/forum/showthread.php?127405#post1334357

[nicklea]

and this is what I did for claiming costs:-

 

http://www.consumeractiongroup.co.uk/forum/showthread.php?133153-Statutory-demand-for-credit-card-debt(bankruptcy)Help!&p=1529356&viewfull=1#post1529356

[Eshezo]

Thanks for the help, I've prepared the set aside documents so I'll let you know the outcome.

 

The solicitors has to be mad !, I sent them a letter earlier this week pointing out the abuse of process and refering them to over 7 other letters of communication with all the disute facts between the companies asking them to withdraw the Demand or admit that it was issued in error. I told them that if they didn;t withdraw it I would apply to have it set aside and also for costs, they say in black and white that it was not issued in error and that they could not guarantee what further action they would take.

 

I think the court will love this one because it's clear that rather than try to settle the dispute they are completly abusing the process by issue me as the guarantor a stat demand.

 

Thank goodness for paper trails.....and if there is one piece of advice I can give anyone it's keep all your corrispondance and special deliver letters etc... because in this instance without it all it could be very difficult.

[martin g]

Hi,

If you want to post up your set aside statement I am sure that you may get some suggestions to "polish" it, to help you to polish off your opposing solicitors.

Martin g

[Eshezo]

Thanks Martin, I've attached the draft of my set aside response, if anyone has suggestions for additions or wording I would appriciate it. The document here is an attachement to forms 6.4 & 6.5.

 

I've removed the actuall company names from a privacy perspective.

 

rgds

stat dec response for forum.doc

Edited December 5, 2010 by Eshezo

[postggj]

Not telling you to suck eggs but you realise you have to use form 6.4 and 6.5 to set aside a statutory demand and obtain a statement of truth on the affi-davit

[Eshezo]

Yes, sorry I didnt explain the document i've posted is an attachement to forms 6.4 and 6.5

[Eshezo]

Just a small bump because I'm issueing this in the next day or so and could do with input on the attachement. cheers

[42man]

From what you have said and it was me it seems that there is a substantial dispute.....I would fight it

 

Hammonds (a firm) v Pro-Fit USA Ltd [2007] EWHC 1998 (Ch)

 

So far as disputed debts are concerned, the practice of the court is not to allow the insolvency regime to be used as a method of debt collection where there is a bona fide and substantial dispute as to the debt. Save in exceptional cases, the court will dismiss a petition based on such a debt (usually with an indemnity costs order against the petitioner).

 

And this one as well..

 

HHJ Peter Coulson QC sets out in Jacob v Vockrodt [2007] EWHC 2403 (QB) when petitioning is an abuse of process that could involve the tort of malicious presentation of a bankruptcy petition.

 

The key parts of the judgement on abuse of process are:

 

Mr. Davies relied on the well-known passage in the judgment of Harman J in Re a Company [1983] BCLC 492 in which he said:

 

 

"First, it is trite law that the Companies Court is not and should not be used as (despite the methods in fact often adopted) a debt-collecting court. The proper remedy for debt collecting is an execution upon a judgment, a distress, a garnishee order or some such procedure. On a petition in the Companies Court, in contrast with an ordinary action there is not a true lis between the petitioner and the company which they can deal with as they will. The true position is that a creditor petitioning the Companies Court is invoking a class right (see Re Crigglestone v. Coal Co. [1986] 2 Ch 327) and his petition must be governed by whether he is truly invoking that right on behalf of himself and all others of his class rateably, or whether he has some private purpose in view. It has long been an order that a petition presented for the purpose of putting pressure on the company is not properly presented: see Re a Company [1894] 2 Ch. 349 and, in a slightly different context, Re Bellador Silk Ltd. [1965] 1 All ER 667."

It is, of course, right that a bankruptcy petition must not be utilised where the petitioner knows that the debt is the subject of a bona fide dispute, but chooses to proceed with the petition in any event, so as to put illegitimate pressure on the other party to pay the debt. But the authorities cited above cannot be taken as authority for any wider principle or proposition. In my judgment, the correct approach to the facts, in a situation where the petition has failed and it is subsequently suggested that the presentation was malicious, was that applied in Partizan Ltd v OJ Kilkenny & Co Ltd [1998] 1 BCLC 157 by Rimer J, when he concluded at page 173:

 

 

[martin g]

Hi,

Build the above quotes into your statement word for word, do not just quote the references because the judge is not going to look them up him/ her self.

 

Martin g

[Eshezo]

Hi All, thought I would give an update and ending to what the outcome was.

 

I issude the set aside paperwork and a date of the 26th Jan was given for the hearing. The solicitor involved wrote to me and said they would contest the set aside application and included a long defence with costs that they were claiming of an additional £1300 !.

 

So when I arrived at the court their barrister wanted to talk prior to the case and he sat and said well despite his instructions he felt that he had little in the way of defence !, I couldn't believe he was actually say that to me .

 

We went into court and the Judge simply asked if there was a dispute on the amount to which the reply from the barrister was yes there seems to be... with that the judge basically bollocked him for even trying to use a Statutory demmand and said it was being set aside.

 

I had applied for costs along the lines of advice from you guys and they were awarded.

 

So thanks for your help everything 110% won and costs aswell.

 

Cheers

[42man]

Excellent news, very well done !! The sooner companies learn not to abuse the insolvency service by issuing statutory demands the better !! I think they hoped you might see the demand and panic and pay up !! What was their 'defence' can you posrt it up here ? (minus the personal details of course)..

[andrew0101]

I have a situation very much along these lines and need some advice...long story cut short...I had to sign a personal guarantee for a supplier. I was the sole Director of the Company that I had to sign the PG for. This was is May 2010 and although I had paid supplier 20k for goods, which I had been forced into doing or I would have been put on stop, I had queries and issues over many invoices and other matters. The supplier in question is a worldwide corporation and had integrated a lot of other businesses into it over the previous years and were in turmoil, ie IT crashes, redundancies, relocations and basically headless chicken syndrome. These queries where there are some email trails and a lot of verbal communications were never sorted out and I was also at a stage where I was talking about selling my business to them. Sadly in early October my health failed me and I had for want of a better expression a ''nervous breakdown'' and was after some very odd behaviour!! seen by my GP and then local mental health team...Again long bit cut short, over the next couple of months on orders from GP and consultant psychiatrist I had to rest and let everything fall apart around me for the sake of my family and health.... Then the lawyers started....winding up petition for company and statutory demand against me....Despite five letters from NHS professionals including a consultant and GP advising that any stress could have a serious and detrimental affect on my health, they have failed to even acknowledge this and just pushed ahead. I let the Ltd company be wound up and have advisors dealing with that, however, I have to fight the stat demand as otherwise they will issue bankruptcy proceedings against me....The reason I let the Ltd co go is because I was too ill to fight it and had made the lawyers aware of this....I filed application to set aside stat demand and have hearing next month....I did advise claimants lawyers day before filing that I intended to defend and gave them reasons. Short reply from them was that they felt I had no grounds.

I am interested in case law or UTCA etc so if I do go to court I can mince any clever barrister to bits...I can prove my claims to illness and am happy to privately share anything with anyone on here who can or will help.

Many thanks.

[martin g]

Hi Eshezo,

I'm pleased to see that you have won, it sounds like a very comprehensive victory.

Have you had your costs from the other side yet, writing the cheque will really hurt them, and if not don't forget that you can put the Court baliffs in to collect the sum due.

 

Martin g