When being asked to set aside a statutory demand, and exercising the statutory discretion, the real question is whether the applicant can show ‘a substantial reason comparable to the sort of reason one sees in paras (a), (b) and (c) of r 6.5(4), why the demand ought to be set aside.’
Peter Gibson LJ said: ‘The language of para (d) does not on its face lend any support for the construction of limiting the application of that paragraph to instances referred to by Jacob J. [the statutory demand being defective to the point of being unfair to the debtor or evidence that the debt would paid immediately]. Indeed, it is quite impossible, I would have thought, to foresee all the circumstances which may arise and which may justify the proper application of that sub-paragraph. But, consistently with the views expressed by Nicholls LJ, it is appropriate when considering whether to set aside a statutory demand under that paragraph to consider the consequence if one does set it aside . . there is no point in setting aside a statutory demand and requiring a creditor to litigate his claim that he is owed money by the debtor if it cannot be foreseen that there will be any ground on which the creditor will be denied his claim were the matter to be litigated. That would only be to increase costs to no purpose whatsoever . .
The real question, as it seems to me, in this case is whether Mr Budge can show a substantial reason comparable to the sort of reason one sees in paras (a) (b) and (c) of r 6.5(4), why the demand ought to be set aside . .
All that the court is concerned with is whether the creditor is able to pursue bankruptcy proceedings founded on the statutory demand. The creditor must establish a debt. It is for the debtor to establish why he cannot do so, at any rate by the route of a statutory demand. Miss Heilbron points out that it is a short-cut route to establishing an inability to pay a debt. The longer route would be to go for judgment in court proceedings, but that raises, fairly and squarely, whether there would be any defence to a claim raised by Contractors which would have any prospect whatever of succeeding were the matter to be litigated.’
Judges:
Peter Gibson, Balcombe, Hutchison LJJ
Citations:
[1997] BPIR 366
Statutes:
Insolvency Rules 1986 6.5(4)(d)
Jurisdiction:
England and Wales
Citing:
Cited – In re a Debtor (No 1 of 1987), ex parte the Royal Bank of Scotland CA 1989
A statutory demand as served showed an incorrectly calculated sum owed and was in the wrong form.
Held: The application to set the demand aside was refused. A statutory demand should not be set aside for a mere technicality.
Lord Justice . .
Cited by:
Cited – Chan v Appasamy 2008
The test for the exercise of the discretion to set aside a statutory demand is whether there are circumstances which would make it unjust for the statutory demand to give rise to insolvency consequences in the particular case. . .
Cited – Remblance v Octagon Assets Ltd CA 17-Jun-2009
A statutory demand was served against the guarantor of the lease after rent arrears arose. He applied for the demand to be set aside, and now appealed against its refusal. He said that the court would have set aside such a demand against the tenant, . .
Lists of cited by and citing cases may be incomplete.
insolvency
Updated: 15 May 2022; Ref: scu.377228
