Statutory Demands: Creditor faces costs order even when they were entitled to serve the statutory demand

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Dunhill v Hughmans (A Firm) [2017] EWHC 2073 (Ch)

The High Court has recently held that although a creditor was ‘entitled’ to serve its statutory demand when it did, it had not been ‘appropriate’ to do so. Accordingly, the creditor was liable for the debtor’s costs of applying to set aside.

The court held that the creditor was entitled to serve its statutory demand upon obtaining summary judgment. However, it went on to consider that entitlement against the appropriateness of doing so when the creditor knew the debtor was seeking permission to appeal.

Upon the debtor’s appeal being allowed, the creditor proposed withdrawing its statutory demand with no order as to costs. The court held that it was reasonable for the debtor to reject that proposal. The debtor was therefore entitled to her costs.

This is a reminder that creditors must be cautious when serving a statutory demand for a debt that is the subject of an unresolved dispute, even when they are in possession of a judgment!

If you need advice on serving or challenging a statutory demand, get in touch with our clerk team who will find the most suitable barrister for your case. Call us on 01245 605040 or email clerks@trinitychambers.com.

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