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The Caterer

On receipt of statutory demands

22 January 2010
On receipt of statutory demands

A statutory demand for payment can be a very effective shortcut but can only be used in cases where the amount of debt is not disputed. Ashkhan Candey explains what your options are should you receive one of these demands.


THE PROBLEM

I am a hotelier and restaurateur and have had continued problems with the quality of the goods sent to me by one of my suppliers. I have spoken to them on the phone and told them that this is simply not good enough. In my last phone call to them, I told their MD that until they sorted their act out I wouldn't be paying their invoices.

A bailiff has just turned up on my doorstep and presented me with a statutory demand, which requires me to pay these cowboys £25,000. I do not want to incur large legal bills but feel that payment to this supplier would be simply wrong. What can I do?


THE LAW

The law allows anyone who is owed money to personally serve a statutory demand bypassing the need to first obtain a court judgment in respect of the monies owed. The basis of the demand is that a debt of more than £600 is due, the debtor has not paid and is unable to pay. This statutory process can be a very effective shortcut, but it can only be used where - and this is the key - there is no bona fide dispute to the debt.


EXPERT ADVICE

You, or ideally your commercial solicitor, should write to the supplier, requiring them to immediately withdraw the demand on the basis that it is disputed, and setting out the basis of the dispute. They should be told that this is a matter that should proceed by way of normal court proceedings. You should warn them that if they do not withdraw the demand, you will make an application to the court to set aside the demand and obtain an order that the supplier pays your legal costs. If you admit some monies are undisputed, make sure you pay that sum.


CHECK LIST

  • Speak to your staff and get details of all the difficulties they have had with the supplier, such as late deliveries, sub-standard quality of goods, customer complaints, and so on.
  • Choose your lawyer carefully and ensure that you get a clear idea of their costs beforehand.


BEWARE!

- Don't instruct a lawyer because they have the cheapest hourly rate. Ideally, rely on personal recommendations and trust your instincts as to whether they actually have your best interests - as opposed to their billing targets - at heart.

  • Agree a strategy with your lawyer as to how you will bring the matter to a swift conclusion - this is not just about the first steps. An order that an opponent pays your legal costs can really hurt the other side, but you also want to avoid a costly battle involving your time and legal costs in the court, if they then proceed to issue normal court proceedings. It often pays to make the other side a settlement offer - at the right price.
  • Ensure that where you have a good case you are not afraid of going to trial. This sends a clear message to the other side and to your staff.

CONTACT

Ashkhan Candey, managing partner,Candey LLP
020 3370 8888

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