Statutory Demand Set aside guidance

[kenpat]

Hi,

My company has been issued a Statutory demand by POST by a company that provided us Professional services.

 

We used them for 2 + years.

 

We used to use their services and they would bill us for the time spent.

 

We would request them for some work and they would bill us in good faith that was the arrangement so no confirmation/approval of time spent was required

 

The last two invoices were ridiculously overcharged

 

for the last invoice we asked a break down of the time spent on each of the items.

 

What we got was a vague scribbling of the time spent.

 

I did not dispute it but since some of the same items appeared on previous invoices

I asked them for the previous invoice breakdown as well.

 

My hope was to question them when I had all the break downs.

 

They did NOT provide me with the breakup of the past invoice.

 

We had paid all their invoices

 

but the last one where we paid approximately 40% of the dues.

 

And were waiting for more information before we could pay them.

 

They waited for a couple of months and now sent us a Statutory demand.

 

So my question is we dont have any formal agreement with them and have not disputed their invoice they hope was we could settle it once we got all the breakdownsp a

nd settle it and not use them in the future.

 

But now since we have this SD what should we do.

 

In reading through some of these posts it seemed like a SD to threaten,

they allege we owe them 2000.00 GBP approx but according to us because they overcharged us we have actually paid them more.

 

Now I would like to know from the experts on here how do we respond to the SD

as there are no details of the court on it.

 

And how do we dispute this.

[maroondevo52]

Hello and Welcome,

 

I've moved this thread to our Legal Issues Forum, hopefully you will get some advice shortly.

 

Regards.

 

Scott.

[dx100uk]

send them an sar

 

and tell them you are going to get the SD set aside.

 

who served the SD?

 

it should be done by hand.

 

who is the company?

 

sounds strange to me.

 

unless they were a legal services co, 'they' cannot issue an SD

 

i think you have to have a consumer credit licence

 

dx

[kenpat]

Hi Dx,

Thank you for the response. What is a SAR.

 

They sent it by post 1st class and it had a signed for but that part was torn and taken and it was put in our mail box.

 

The client knows that the invoice is in dispute and I think they did it to threaten us but wanted to know if I need or have to respond to the SD.

 

It Says SD123(1)(a) or 222(1)(a) of the Insolvency Act1986 on form 4.1

 

Please help I am confused and not sure how to respond.

[kenpat]

It is a Professional services company who did accounting for us and we shifted to some other firm because of these costs

which had not been agreed and been unreasonably and exponentially increased by sending an invoice every 6 months for services rendered.

 

They thought they could keep charging us as they want and we would comply to pay.

 

When we asked for a log of time spent on the current and prior invoices they scribbled some maths numbers to match their costs

with the time spent and sent it only for the last invoice and NOT prior invoices.

 

We paid 40% and then asked them to send for other invoices and what we got was a pause and then a SD.

[dx100uk]

hold and click on the SAR.

 

i'll get someone to pop in.

from our legal bods.

 

dx

[kenpat]

Hi Dx,

Thanks I did click on the link but am not sure what the SAR means. They have sent me an SD for the company and I believe the SAR is for an individual. Also it is not a collection agency but the professional services firm that is following up. Hope I have clarified the situation.

[42man]

If it is still in dispute and you can show hard evidence that they have not answered your dispute in full then you should apply to set aside the demand in court and claim your costs. Moreover it is a frivolous and trite action in the fact that they have made no attempt to serve it.

 

You could write back stating that

 

You are in receipt of their statutory demand and that it is your intention to set it aside due to an ongoing and substantial dispute that they have failed to respond to.

 

If you want to just give them a worrying hint without getting into a litigation battle via the postal service then you can state that you will be highlighting the fact that they had made no attempt at service and have not received any witness statement from a process sevrer or solicitor at the time you received the demand and state that presenting a statutory demand as a debt collection tool when there is a potentially triable case can be seen as an abuse of process, also you may like to enquire as to why they haven't filled out the form properly when the insolvency rules state that the demand should include the name of the court nearest to the defendant..

[42man]

Did they fill out the rest of the form correctly ? did they for example leave a name ind telephone number of somebody you can contact ?

[42man]

If they haven't even bothered to serve the demand then you can ignore it as they would (if they were to present a petition) have to prove that they had attempted personal service. Have you spoken to a solicitor yet as that might be a wise move first.

[kenpat]

If it is still in dispute and you can show hard evidence that they have not answered your dispute in full then you should apply to set aside the demand in court and claim your costs. Moreover it is a frivolous and trite action in the fact that they have made no attempt to serve it.

 

You could write back stating that

 

You are in receipt of their statutory demand and that it is your intention to set it aside due to an ongoing and substantial dispute that they have failed to respond to.

 

If you want to just give them a worrying hint without getting into a litigation battle via the postal service then you can state that you will be highlighting the fact that they had made no attempt at service and have not received any witness statement from a process sevrer or solicitor at the time you received the demand and state that presenting a statutory demand as a debt collection tool when there is a potentially triable case can be seen as an abuse of process, also you may like to enquire as to why they haven't filled out the form properly when the insolvency rules state that the demand should include the name of the court nearest to the defendant..

 

 

They just sent me an email with the Statutory demand in the attachment. So I plan to respond to the email as per your response above.

 

My question is whether I should respond to it via email or by postal mail because they have done both. Also since I am deciding to set it aside how do I send it to the court since they have not mentioned any court etc.

[kenpat]

If they haven't even bothered to serve the demand then you can ignore it as they would (if they were to present a petition) have to prove that they had attempted personal service. Have you spoken to a solicitor yet as that might be a wise move first.

 

The amount in question is less than 2k and going to a lawyer and in trying to fight this I dont want to end up paying that to the lawyers . But I dont want them to assume that they can charge anything and then force us to pay using the SD. Do you think they can take this to court for that amount. Wouldn't it cost them just as much to even file a case.

[kenpat]

Did they fill out the rest of the form correctly ? did they for example leave a name ind telephone number of somebody you can contact ?

 

Yes they did leave the name of the firm and the telephone etc. While I do intend to set it aside I am wondering to which court should I address it? No court details are mentioned. The 6.4 form to set aside asks for court/judge etc so what do I fill in those columns.

[IdaInFife]

you say in post #1 you received the SD by post but then post #11 you received the SD by email???

[citizenB]

You can send an email advising that it is your intention to set aside the demand as per 42man's advice. However, you should confirm this in writing and mail by either recorded or special delivery post.

 

You can find your local court either through the telephone directory or by using the following government website.

 

http://hmctscourtfinder.justice.gov.uk/HMCTS/

 

You should then telephone the nearest one to you and ask if they deal with insolvencies.

 

You then need to complete forms 6.4 and 6.5 we can help you with those.

 

You then take the completed forms/affadavit to the court where they will stamp and you will sign

 

The court then sends copies to the petitioner.

 

The forms will then be put before a Judge who will decide if you have good cause to set aside and will send you any notice of court dates.

 

I see that there have already been some suggestions as to how the petitioner has already made some errors in serving and of course there is an unresolved dispute.

 

It is open to the petitioner to withdraw - and you should claim any costs for this disgraceful act.

[kenpat]

Hi,

Thank you for your response.

 

I will take a look at the one thats closest and do as you have advised.

 

I will keep everyone posted.

 

In going through their invoices I realised there was a big discrepancy in the same service they provided last year.

 

They have billed for the same work which they have NOT even started @ 25% more than last year.

 

This was not notified to us nor acknowledged by us.

 

This has been the case for the invoice/s in general so not sure if it stands in court

 

but I would assume just because someone is doing work based on time they cannot charge as they seem fit without any logs or any further evidence to support their invoices.

 

Thanks!

[42man]

I'm afraid my knowledge of company bankruptcy process isn't strong however there are several high court cases that you may find useful in your set aside.

 

Maybe this one to thwart the fact that they have made no attempt at personal service

 

Judge Boggis QC - RE AWAN - [2000] BPIR 241

 

'In my judgment, bankruptcy is one of the most serious forms of execution that can be brought against a debtor. In any bankruptcy proceedings it is, in my view, absolutely clear that the provisions as to service must be followed exactly. The rules provide in terms that the petition must be supported by an affidavit of service showing how the petition was served, and express reference is made to substituted service and the way in which that then is to be proved, which involves the affidavit of service having with it a sealed copy of the order.' - JUDGE BOGGIS QC - SITTING AS A JUDGE OF THE HIGH COURT

Then r 6.15 says:

(1) Service of the petition should be proved by affidavit.

(2) The affidavit shall have exhibited to it -

(a) a sealed copy of the petition, and

(b) if substituted service has been ordered, a sealed copy of the order;

and it should be filed in court immediately after service.

 

And possibly these too, to highlight the fact that they are attempting the insolvency process when there is a dispute in place and a push for your costs also

 

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:

 

 

[kenpat]

I'm afraid my knowledge of company bankruptcy process isn't strong however there are several high court cases that you may find useful in your set aside.

 

Maybe this one to thwart the fact that they have made no attempt at personal service

 

Judge Boggis QC - RE AWAN - [2000] BPIR 241

 

'In my judgment, bankruptcy is one of the most serious forms of execution that can be brought against a debtor. In any bankruptcy proceedings it is, in my view, absolutely clear that the provisions as to service must be followed exactly. The rules provide in terms that the petition must be supported by an affidavit of service showing how the petition was served, and express reference is made to substituted service and the way in which that then is to be proved, which involves the affidavit of service having with it a sealed copy of the order.' - JUDGE BOGGIS QC - SITTING AS A JUDGE OF THE HIGH COURT

 

Hi 42man,

I really appreciate your detailed response and would be glad to include all of this in my set aside. However I am not sure where I would add all of these details. Do I reply with my set aside ?

Also when I try to fill 6.4 I have been advised above to find the court that is closest to me but how do I know who the Judge is and the other details on the form. Any advise there?

 

Ken

PS I had to take off part of your message because they wold nt allow me to post links.

[42man]

This is how to fill out form 6.4 if you need a guide

 

How to fill in Form 6.4

 

For (a) fill in your name and address

 

The section that states attend before the Registrar leave blank. This will get filled in by the court.

 

For (b)

on the hearing of an application by (b) (insert your name)

 

An application for an order that the statutory demand dated (insert date on the SD that you received from (CREDITORS NAME) be set aside

 

For ©

The grounds on which the applicant claims to be entitled to the order are set out in the witness statement of the applicant sworn on (insert the date that you hand the forms into the court).

 

For (d)

The names and addresses of the persons upon whom this application should be served are:

(d) (insert name and address of CREDITOR/SOLICITOR)

 

For (e)

The applicant’s address for service is: (e) (insert your name and address)

Cross out where it states (Solicitor for the) and just leave the word Applicant and sign and date the form.

[42man]

And 6.5 is the witness statement that usually accompanies the 6.4 document, you can find all the documents here - http://www.bis.gov.uk/insolvency/about-us/forms/england-and-wales

[42man]

I think you should be using phrases like:

 

The defendnat avers that the claimant is aware of a substantial dispute but has refused to enter into any meaningful discussion of the issues.

 

Despite this the claimant has issued a frivolous and trite demand.

 

The claimant has made no attempt whatsoever to serve the demand personally I refer to the authority of Judge Boggis -

 

Judge Boggis QC - RE AWAN - [2000] BPIR 241

 

'In my judgment, bankruptcy is one of the most serious forms of execution that can be brought against a debtor. In any bankruptcy proceedings it is, in my view, absolutely clear that the provisions as to service must be followed exactly. The rules provide in terms that the petition must be supported by an affidavit of service showing how the petition was served, and express reference is made to substituted service and the way in which that then is to be proved, which involves the affidavit of service having with it a sealed copy of the order.' - JUDGE BOGGIS QC - SITTING AS A JUDGE OF THE HIGH COURT

Then r 6.15 says:

(1) Service of the petition should be proved by affidavit.

(2) The affidavit shall have exhibited to it -

(a) a sealed copy of the petition, and

(b) if substituted service has been ordered, a sealed copy of the order;

and it should be filed in court immediately after service.

[42man]

The claimant is clearly using the insolvency service as a method of debt collection -

 

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."

[42man]

And this one too as mentioned above...

 

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).

[kenpat]

And this one too as mentioned above...

 

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

 

 

Hi 42man,

I greatly appreciate your responses I will now formulate a reply and sent it out.

Should I claim costs for the Set aside as some have suggested.

 

One more question I also read that it would cost the claimant 1100 to file a petition and another 400-500 to file a case in court. Given the scenario do you realistic see them filing a case or just trying to see if we come forward to settle. I would have loved to settle but as you have rightly pointed out they have made no suggestions to talk about the invoice/s

[kenpat]

This is how to fill out form 6.4 if you need a guide

 

How to fill in Form 6.4

 

For (a) fill in your name and address

 

The section that states attend before the Registrar leave blank. This will get filled in by the court.

 

For (b)

on the hearing of an application by (b) (insert your name)

 

An application for an order that the statutory demand dated (insert date on the SD that you received from (CREDITORS NAME) be set aside

 

For ©

The grounds on which the applicant claims to be entitled to the order are set out in the witness statement of the applicant sworn on (insert the date that you hand the forms into the court).

 

For (d)

The names and addresses of the persons upon whom this application should be served are:

(d) (insert name and address of CREDITOR/SOLICITOR)

 

For (e)

The applicant’s address for service is: (e) (insert your name and address)

Cross out where it states (Solicitor for the) and just leave the word Applicant and sign and date the form.

 

 

 

Hi 42man,

I appreciate this and have filled out 6.4 proceeding to 6.5. Can you please advise on

b. I have put the date of the SD

c. Should I mention 1. Do not admit.... because the debt is in dispute or

6. Have a counter claim ..... as we believe once we get the prior invoices and cross check we may have over paid them.....

 

Thanks again!

Ken