Simon Bain Building Services Limited v Jenna Cardone & Anor
[2023] EWHC 2916 (Ch)
Conrad Clauson v Knowles Construction Limited
18 June 2024
[2024] EWHC 1520 (Ch)
High Court
Conrad Clauson owed money to Knowles Construction. He tried to avoid paying by arguing the amount was wrong and he wasn't properly notified of the debt. The judge agreed there was a problem with part of the amount, but not all of it. The judge also said Conrad was notified enough about the debt. So, Conrad still has to pay Knowles, except for the part that's in dispute.
Key Facts
- •Mr. Conrad Clauson applied to set aside a statutory demand for £3,335,962.99 from Knowles Construction Limited.
- •The debt stemmed from a personal guarantee Mr. Clauson provided for Yarborough Management Limited's debt to Knowles.
- •Disputes arose from construction works at 55 Avenue Road, London, leading to a compromise agreement including a personal guarantee and a new contract.
- •Knowles initiated Part 7 proceedings against Yarborough for the settlement sum (£830,000).
- •Yarborough counterclaimed against Knowles for significant defects in the works, totaling approximately £2,104,779.50.
- •Mr. Clauson argued the debt was disputed, he had a counterclaim/set-off, and the demand was improperly served.
Legal Principles
To set aside a statutory demand, the debtor must demonstrate a genuine triable issue – a real prospect of success in defending the claim or succeeding on a counterclaim.
Insolvency Rules 2016, Rule 10.5(5); Swain v Hillman [2001] 2 All E.R. 91; CPR 24.2(a)
Overstating the debt in a statutory demand doesn't automatically justify setting it aside.
Re a Debtor [1992] 1 W.L.R. 507; Howell v Lerwick Commercial Mortgage Corpn Ltd [2015] 1 W.L.R. 3554
The court has residual discretion to set aside a statutory demand if it's unjust for it to lead to bankruptcy consequences.
Octagon Assets Ltd. v. Remblance [2010] Bus. L.R. 119; In re A Debtor (No 1 of 1987) [1989] 1 WLR 271
Service of a statutory demand is a jurisdictional prerequisite for a bankruptcy petition; it must comply strictly with rules or have irregularities cured.
IA 1986, sections 267(2)(c), 268(1); IR 2016, rule 10.2; PDIP, paragraphs 11.2, 12.7; Regional Collection Services Ltd v Heald [2000] BPIR 666; Canning v Irwin Mitchell LLP [2017] EWHC; Mandiri
Outcomes
Application to set aside the statutory demand dismissed.
While Yarborough's counterclaim created a substantial dispute regarding a portion of the debt, the court found sufficient evidence that the remaining portion (£1,231,183.49) was not substantially disputed. The court also determined that service, although not strictly personal, was sufficient to meet the requirements.
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