Statutory Demand – In the current economic climate more and more people are facing requests for payments of money owed either in a professional or a personal context.
There are a number of ways which can be used to attempt to gain payment for money owed. One of these methods is to issue a Statutory Demand.
What is a Statutory Demand?
A Statutory Demand is a request, using a particular form, for a liquidated debt above £750.00. This request sets out time limits for payment or objection to the demand.
A Statutory Demand should be personally served on you. (NB there are situations where personal service is not possible and in those cicumstances a Statutory Demand may be served by other means).
What does it mean?
It is a formal request for payment of a liquidated debt. If you receive a Statutory Demand you will be given a 21 day period to pay the sums requested on the face of the Demand.
What if I don’t pay?
If the sums claimed under a Statutory Demand are not paid or an agreed arrangement entered into for payment within 21 days of service of the Statutory Demand then the creditor (the person who issued the Demand) may issue a Bankruptcy Petition against you.
What can I do about it?
If you are served with a Statutory Demand you can; pay the amounts owing, enter into an arrangement with the creditor, or, in certain circumstances you may be able to set the Statutory Demand aside.
How can I set aside a Statutory Demand?
As a Statutory Demand is a formal request for payment of a liquidated debt, (i.e. it must be a debt which is for an exact sum of money, usually agreed upon by the parties or set down in a contract), the amount claimed must be liquidated and must be above the sum of £750.00.
There are a number of grounds under which you can apply to set aside a Statutory Demand, some of these are listed below;
- The amount owed is less than £750.00.
- The sum claimed is not liquidated. This is a very important ground, where a sum is not agreed or liquidated, and it requires some form of decision to be made as to the amount, it cannot be pursued by way of a Statutory Demand. (e.g. sums claimed for rent which was never agreed. It should also be noted that professional fees which have not been agreed cannot be claimed by Statutory Demand following the case of Truex -v- Toll).
- There is a material dispute in the sums claimed. (e.g. you don’t owe the money, it has been paid or it is owed by someone else).
- You have a counterclaim or are owed enough money by the Creditor that would be as much or more than the sums claimed on the Statutory Demand. (e.g. they owe you as much or more than you owe them).
- The debtor has security for the amount claimed and has not given up this security. (e.g. they hold a mortgage against your house for the money which they are claiming) The court will take this into account providing the value of the security is larger than the amount claimed.
- The debt is Statute Barred, (i.e. it has gone beyond the date on which it can legally be claimed).
As well as this the court has the ability to set aside a Statutory Demand on grounds which it believes would cause injustice to the debtor.
If any of the above apply then you may be able to have the Statutory Demand set aside. In order to set it aside you should bring an application to the court to do so.
When should I apply to set aside a Statutory Demand?
When you receive a Statutory Demand you will be given a period of 18 days to apply to the court to have the matter set aside. It is possible to apply after this time, however, if you do so you must ask the court for permission to apply out of time.
If the application is made within the 18 days allowed then there is no court fee, if it is made after a court fee is payable.
What happens if a Statutory Demand is set aside?
If the Statutory Demand is set aside then the creditor cannot issue a Bankruptcy Petition against you based on that demand. However, they may issue other proceedings against you for the sums claimed (e.g. Small Claims, County Court or High Court proceedings).
If only part of the Statutory Demand is set aside then they may proceed against you for the remainder which isn’t.
Does this apply to me?
If you are an person living in Northern Ireland who has received a Statutory Demand then this may apply to you.
All of the above is in relation to a Statutory Demands served against individuals. If you are a Limited Company and a Statutory Demand is served against you then a different set of rules apply.
If you received a Statutory Demand or have any queries in relation to the matters raised in this article you should contact our Debt Recovery Department or e-mail us at email@example.com this article is a guide to Statutory Demands and does not constitute Legal Advice on the topic.