Legal documents must be correctly served!

Posted: 19th April 2017

BankruptcyLegal documents are not worth the paper they are written on unless they are formally served on those to whom they are addressed. In one case exactly on point, a bankruptcy petition was dismissed after a statutory demand was posted through the letterbox of a house in which a judgment debtor had never lived.

A professional firm had obtained a default judgment against a former client in respect of substantial unpaid fees. It subsequently raised a statutory demand for the sum owed and employed a tracing agent to locate the debtor. On being informed that he lived in a house in Cornwall, a process server instructed by the firm posted the demand through its letterbox. A bankruptcy petition was issued after the demand elicited no response from the debtor.

The latter, however, denied that he had ever lived in Cornwall and presented ample evidence that his home was in fact on the other side of the country, in Essex. He had thus never received the demand. A district judge nevertheless allowed the firm to pursue its petition on the basis that the debtor was aware of the judgment against him and that the failure to serve him with the demand had caused him no prejudice.

In upholding the debtor’s challenge to that ruling, the High Court noted that the rules relating to service contained within Section 268(1) of the Insolvency Act 1986 are strict. The statutory demand not having been served in accordance with those rules, there was no discretion in the matter and the petition had to be dismissed.

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