Statutory Demands

I was involved today in helping a company complete a Statutory Demand, which after a period of 21 days (+2 postage) means if the debtor has not paid in full they can and will instigate bankruptcy proceedings.

Why am I posting this? Because normally I'm fighting the use of SD's and I was horrified how easy it was to do. Clearly serving it correctly is important, but that was straightforward here.

I was genuinely shocked that within 10 minutes it was started and finished. No wonder DCA's use them from time to time rather over enthusistically. At least this one was genuine, but it has served to confirm my belief that while they should always be taken seriously, most are likely to be idle threats.

For anyone who doesn't know, all you do is download the correct form, 4.1 or 6.1, fill it in and serve it. It is that easy, but will put the fear of God into some poor soul who doesn't realise this.

Hopefully this may raise awareness a little. Curlyben did an excellent thread on their use which someone may be kind enough to link to.

[bluebottle]

Re: Statutory Demands

I was involved today in helping a company complete a Statutory Demand, which after a period of 21 days (+2 postage) means if the debtor has not paid in full they can and will instigate bankruptcy proceedings.

Why am I posting this? Because normally I'm fighting the use of SD's and I was horrified how easy it was to do. Clearly serving it correctly is important, but that was straightforward here.

I was genuinely shocked that within 10 minutes it was started and finished. No wonder DCA's use them from time to time rather over enthusistically. At least this one was genuine, but it has served to confirm my belief that while they should always be taken seriously, most are likely to be idle threats.

For anyone who doesn't know, all you do is download the correct form, 4.1 or 6.1, fill it in and serve it. It is that easy, but will put the fear of God into some poor soul who doesn't realise this.

Hopefully this may raise awareness a little. Curlyben did an excellent thread on their use which someone may be kind enough to link to.

I think what you're trying to say, Labman, is that SDs should only be used where justified, not thrown around like confetti as DCAs do. Can you imagine the Attorney-General applying to the High Court for an order to put the Leeds Losers on the Vexatious Litigants List? It's an interesting thought.

[labman]

Re: Statutory Demands

No, what I was saying was I know they're overused by DCA's and frowned on by the OFT. However, I now understand why - it is so easy to send one. I could now complete one within five minutes or less, and so template ones must be common.

I cannot stress enough they should be treated seriously, but most are likely to be effective threats. I now understand why.

[Nikolai]

Re: Statutory Demands

If they are used by a DCA it will almost certainly be to threaten, intimidate and apply more pressure. The DCA will know that if the threat is followed through it means the issue of bankruptcy proceedings. This would involve them in paying substantial costs to have the proceedings issued, and the likely result is a Bankruptcy Order, which means in most cases the creditor gets nothing. They will bank on the fact that most people don't know this.
Bankruptcy, by the way, is not the end of the world for a person with substantial debts. It can be the way forward, a new start (and it gets creditors off your back for good).
If you are served with a Statutory Demand, you have the right to apply to the County Court to have it set aside. The procedure isn't that difficult. You should immediately write to the creditor who has served the demand and say you will apply to court to have it set aside. Whatever the merits of your position, a DCA or creditor who has used the SD as a frightener will not want to get involved in a court application, because it involves them instructing solicitors and appearing in court (ie it costs them money). You have nothing to lose by telling a creditor that if the SD is not withdrawn by them, you will apply to court to have it set aside. You'd be surprised how often they back down!

[Captain Haddock]

Re: Statutory Demands

I have an interest in this as I was served one out of the blue a few months ago. Doesn't the DCA/Sol have to prove insolvency before these things are issued? Also, the one I received included no provision for set-aside, even though I was under the impression it should have? I also don't recall anything about a court date in the correspondence, either.

Mine was issued by a Solicitor. Any musings on who put who up to serving the demand - the sol to the DCA or vice versa?

[labman]

Re: Statutory Demands

If you have a look at the following link:

http://www.bis.gov.uk/insolvency/abo...land-and-wales

You will have received either Form 4.1 or Form 6.1, probably 6.1.

If you look through the form, you will see that it is possible to serve these without a judgment having been made in the court. This is perfectly legal. However, any organisation serving these must ensure they are served properly, and this is where many come unstuck. It is worth checking whether or not yours was served correctly.

If you are able to post up details of who the solicitor was representing it would be helpful. We might be able to give you more of an indication as to whether or not is it a company that routinely issues these as threats, or whether it is not. Either way, you should take it seriously.

[CleverClogs]

Re: Statutory Demands

Doesn't the DCA/Sol have to prove insolvency before these things are issued?

Not really, as failure to respond may be taken as evidence of insolvency.

Also, the one I received included no provision for set-aside, even though I was under the impression it should have? I also don't recall anything about a court date in the correspondence, either.

That was probably so the creditor did not need to delay matters by serving it with only one day to go. :tinysmile_hmm_t2:

Mine was issued by a Solicitor. Any musings on who put who up to serving the demand - the sol to the DCA or vice versa?

Probably the solicitor, but which DCA was it?

[labman]

Re: Statutory Demands

Who suggested issuing a SD to you, solicitor or DCA may also be heavily influenced by the cirumstances surrounding the debt and how you have responded to anything sent so far, if you have responded.

Without knowing the history of the debt in question, it is really impossible to give any sensible suggestion as to where it stemmed from, but at the end of the day, it is irrelevant anyway, as it has been issued, so you need to deal with it.

[Captain Haddock]

Re: Statutory Demands

The DCA is our friends 1st Credit and the monkey sol is Yuill & Kyle over in Glasgow. I have a thread on this case on LB; it seems to be sitting in limbo atm and I have a complaint in against the sol via the Scottish Legal Complaints Commission.

The DCA wrote to me once about the account, ages ago. I looked upon it as a phishing excercise and ignored it. The sol wrote to me once, prior to the SD, but the letter they sent did not stipulate what account/debt they were referring to. The next thing was the SD, served via a salacious sheriff officer. I will update that thread as events progress.

[Captain Haddock]

Re: Statutory Demands

If you have a look at the following link:

http://www.bis.gov.uk/insolvency/abo...land-and-wales

You will have received either Form 4.1 or Form 6.1, probably 6.1.

If you look through the form, you will see that it is possible to serve these without a judgment having been made in the court. This is perfectly legal. However, any organisation serving these must ensure they are served properly, and this is where many come unstuck. It is worth checking whether or not yours was served correctly.

If you are able to post up details of who the solicitor was representing it would be helpful. We might be able to give you more of an indication as to whether or not is it a company that routinely issues these as threats, or whether it is not. Either way, you should take it seriously.

What I got was rather different, being as I'm in Scotland. However, there was nothing in the way of parts A, B and C as set out in form 6.1. I will post what I got (details edited) on my own thread.

[mercury-the-messenger]

Re: Statutory Demands & how to obtain a set aside

In times gone by 1st credit were notorious for "abusing " the system hence the Oft intervention.

http://www.oft.gov.uk/shared_oft/pre...quirements.pdf


http://www.oft.gov.uk/news-and-updates/press/2009/20-09

the next 2 threads explain how someone dealt with a set aside. It seems they were not awarded any costs . Over the road there are threads where people obtained significant costs from the court having "called the bluff" of the instigator of the statutory demand.

TO FUTURE READERS who google this thread :-

basically do not be afraid ( always a good idea to write to your MP about it). If you have to go to court to apply for a set aside HAVE YOUR PAPERWORK IN DATE ORDER --if possible have 2 copies one for the Judge.
"usually "


http://www.legalbeagles.info/forums/...ht=#post193465

[mercury-the-messenger]

Re: Statutory Demands

the follwing has come to light

quote "Statutory demands and unliquidated claims



Question

Is service of a statutory demand a proper course where there is a well
established claim for breach of contract worth at least £750 in general damages,
but there is a substantial dispute about whether the claim has a value of much
more than £750?


Answer

It is not a proper course, even if the claim is undisputed. A claim
for damages is just that, and is almost always a claim for an unliquidated sum.
The Insolvency Act 1986, s 267(2) (b) provides that the petition debt or debts
must be “for a liquidated sum payable to the petitioning creditor”. Hope v
Premierpace (Europe) Ltd [1999] BPIR 695, while not exactly on the point of
contractual damages, bears out that a petition may not be presented where the
sum claim is unliquidated. There is often confusion because the definition of
“debt or liability” for the purpose of a winding up petition is much wider (see
Insolvency Rules 1986 r 13.12)."

[Captain Haddock]

Re: Statutory Demands

Mercury,
Can you explain the above in layman's terms?

[Nikolai]

Re: Statutory Demands

If the amount claimed is unliquidated it means the claim is not for a specific amount, such as £2,436.50, but is rather a claim for "damages" to use the legal expression. A good example is a claim for damages for personal injury, where you don't claim an exact amount, but leave it up to the court to fix the amount of compensation if you win.
The other type of claim is one for a liquidated amount, where you know from the start how much you're claiming - for example someone owes you £1,200 so this is what you claim for.
A statutory demand is not the right way to claim an unliquidated amount, as correctly stated by Mercury. SD may be used to claim a liquidated amount, as some DCA's do, but it's risky for them to do it, as if you apply to court to set aside the SD, one of the things the court has to decide is whether there is a triable issue. In other words, if you can show you have some sort of defence to the claim, it is a big factor in getting the SD set aside.
As for vicarious liability, if the DCA/solicitor is acting on behalf of the lender as an agent seeking to recover money owed to the lender, then the lender is likely to be responsible for the acts of its agents. If the DCA has bought the debt, then my view is that the original lender is out of the picture, and therefore not vicariously liable for the DCA's actions, as there's no agency involved.
Hope this helps!

[Captain Haddock]

Re: Statutory Demands

The DCA, in my case, has bought the debt. Right now, I'm more concerned about the monkey sol in Glasgow and the way he served the SD. I am sure it was a scare tactic as there was nothing pertinent to a court appearance in the SD. Aside from no mention of set-aside and the differing account numbers on certain paperwork, I am more than a little curious as to why the sol didn't have a good look at the paperwork the DCA sent him and then warn the DCA off on the complete mess the account was in. Mr Monkey has disappeared after the denial and follow-up complaint was sent. Still, he's now getting his arse felt by the Scottish Legal Complaints Commission and possibly the Law Society of Scotland, too.