Abuse of process – inappropriate use of the threat of insolvency

legal updates

The Solicitors acting for the Creditor should have known better than to use the threat of insolvency for debt collection purposes,

Read our disclaimer keyboard_arrow_down

This website content is intended as a general guide to law as it applies to the motor trade. Lawgistics has taken every effort to ensure that the contents are as accurate and up to date as at the date of first publication.

The laws and opinions expressed within this website may be varied as the law develops. As such we cannot accept liability for or the consequence of, any change of law, or official guidelines since publication or any misuse of the information provided.

The opinions in this website are based upon the experience of the authors and it must be recognised that only the courts and recognised tribunals can interpret the law with authority.

Examples given within the website are based on the experience of the authors and centre upon issues that commonly give rise to disputes. Each situation in practice will be different and may comprise several points commented upon.

If you have any doubt about the correct legal position you should seek further legal advice from Lawgistics or a suitably qualified solicitor. We cannot accept liability for your failure to take professional advice where it should reasonably be sought by a prudent person.

All characters are fictitious and should not be taken as referring to any person living or dead.

Use of this website shall be considered acceptance of the terms of the disclaimer presented above.

A client company was recently served with a Statutory Demand threatening to wind it up in default of payment of the sum demanded.

First, we noted that the claim was for an ‘unliquidated’ sum.

Such categorisation applies to sums of money not established in advance by the contracting parties as compensation for a breach of contract, but determined by a court after such breach occurs.

Secondly, the claim arose from a cause of action previously the subject of defended litigation, which the Creditor had discontinued some months earlier.

Accordingly, we determined that service of the statutory demand and the threat of winding up proceedings in respect of a hitherto disputed unliquidated claim was wholly inappropriate and amounted to an abuse of the Court Process.

In this regard, we cited the authorities of Re a Company (No. 001573 of 1983)[1983] BCLC 492, Re a Company (No. 0012209 of 1991)[1992] 2 All ER 797, and Coilcolor Ltd v Camtrex [2015] EWHC 3202 (Ch), [2015] All ER (D) 90 (Nov).

Notice was duly given to the Creditors solicitors that unless the Statutory Demand was withdrawn by the end of the day then our client would make an application to the Court for an injunction restraining the presentation of a petition and advertisement thereof, without further notice.

Frankly, the Solicitors acting for the Creditor should have known better than to use the threat of insolvency for debt collection purposes, particularly when the purported claim was already disputed. They were duly told in terms.

Suffice to say that the Demand was withdrawn within the hour!

HaswentWebsites for dealers small and large

Composer is a next-gen automotive platform that has been designed from the ground up to give you an intuitive way to promote your stock. You have extensive stock management options, and you'll gain a brilliantly responsive new website to advertise your stock, starting at just £39.99/month.

Howard TilneyLegal AdvisorRead More by this author

Related Legal Updates

Help! I am being chased for interest and compensation against invoices I paid years ago

We would advise you to check your contracts with suppliers for the payment terms and what happens in the event of late payment.

Chasing a debt

You now have to give the person 30 days to respond and either make payment or send back the reply form and information sheet.

Does the Government owe YOU?

UK small and medium sized businesses owed £26.3 billion in late payments.

Cheques – As good as cash

If you end up with a cheque which is bounced, the next step is to put the drawer on notice of the dishonoured cheque.

Statutory interest and compensation in business to business transactions

The compensation starts at £40 for commercial debts of less than £1,000 and escalates to £100 for commercial debts of £10,000 or more.

New rules for those chasing bad debts

If you are chasing a debt from 1 October 2017, you need to be aware of and follow the new rules.

Debt Recovery – When Do ‘Reminders’ Become ‘Harassment’?

547 attempted calls over a 6 month period!

Get in touch

Complete the form to get in touch or via our details below:

Phone
01480 455500
Address

Vinpenta House
High Causeway
Whittlesey
Peterborough
PE7 1AE

By submitting this quote you agree to our Terms & Conditions and Privacy & Cookies Policy.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.