Demand the best

Posted: 3rd December 2014

SD extractThe dangers of cheap advice were exposed in the course of a recent challenge to the blunt tactics of unqualified debt collectors.

Williamsons made successful application on behalf of clients who had been presented with statutory demands pursuant to the Insolvency Act 1986 after a simple plumbing job turned into a nightmare.

The couple had engaged a local contractor to perform what was expected to be minor work in the bathroom of their home but on completion they were presented with a bill for more than twice the amount that they had anticipated.  They questioned the charges.

Matters went from bad to worse when the plumber put the matter in the hands of his “business finance consultants” who decided that the best approach was to get tough.  Our clients then found themselves hit with intimidating formal demands that appeared to give them three weeks to pay the inflated sum in full or face petitions for bankruptcy.  Fortunately, they consulted Williamsons.

It would be difficult to write a more comprehensive scenario for inclusion in a law student’s examination paper.  Easy points to start with, where neither of the demands received by our clients were signed on behalf of the creditor – a fundamental requirement. Further debate arose from the fact that the demands were posted rather than served personally but then there were more serious problems. 

Within the text of the demand the “consultant” had added a claim for interest, penalties and legal costs under the Late Payment of Commercial Debts (Interest) Act 1998 and subsequent regulations.  It would be reasonably obvious to any suitably qualified lawyer that the underlying transaction was not a business deal to which the 1998 Act applies but a consumer matter.

The fact that this was plainly a consumer transaction then led to further trouble for the creditor which was that of non-compliance with the Consumer Contracts Regulations 2013 which came into force in June 2014. 

These are a complex set of regulations requiring, amongst other things, clear notice of cancellation of rights to be given and a cooling off period allowed before work starts.  It was evident that the tradesman had failed to comply with those regulations, although again he had acted on the (inadequate) advice of his “business consultants”.

The other overwhelming point, which anybody contemplating the use of a statutory demand should recognise, was that on any analysis there was a substantial dispute here, whether as to the fundamental liability or the amount payable.  It was, as the judge concluded, a case that “should never have proceeded by statutory demand”.

Branding it a “high risk strategy” he made an order for payment of the vast majority of our clients’ costs which, as a result of the intransigence of the creditor’s business advisors (who left him to represent himself at the hearing) amounted to more than £2,000.00.

Those costs have now been paid by the creditor and that may well be the end of the matter, bearing in mind the underlying difficulties, particularly with the Consumer Contract Regulations.

Meanwhile, it is a vivid demonstration of the risks of enlisting cheap advice and assistance from individuals and companies who don’t understand the law properly.   In the right hands, statutory demands are very useful tools but they need to be handled with great care.

Here at Williamsons, we have had experience of dealing with these documents and procedures throughout the 28 years that they have been around.  We have used them on behalf of creditors many times and successfully defended many applications to set them aside or for injunctions restraining (in the case of a company debtor) the presentation of a winding up petition.

We can be poachers as well as gamekeepers of course and so in this case we were able to neutralise the threat - much to the delight and relief of our clients.

Whether you are owed money and thinking that a statutory demand may be the right course of action, or you’re an individual or company who receives one and thinks that it is the wrong course of action, don’t delay. Email or call us now on 01460 200450

For further comment on this case see Fair Weather Friends at legalchap’s blog.