13 Mar Setting aside a statutory demand:( Individuals)
Courts can set aside statutory demands but will only do this if there is a genuine dispute about whether the debt exists. A small mistake in the demand about the amount owed will not make it invalid.
Individuals
Within 18 days of the demand being served on you, or within 18 days of the date of the first advertisement (if the demand was advertised), you may apply to the court to set aside the demand. If you live abroad, the time limit for applying to set it aside is 22 days.
You must apply to the court where you would present your own bankruptcy petition, using:
- Form 6.4 Application to Set Aside a Statutory Demand
Form 6.5 Witness Statement in Support of Application to Set Aside Statutory Demand.
If the creditor who has filed the bankruptcy petition is a Government department and the demand says the petition will be presented in the High Court, you should apply to the High Court.
If the debt is subject to a judgment and the demand says the petition will be presented in the High Court, you should apply to the High Court.
If the demand is based on an unsatisfied judgment, the court will not normally set aside the demand until you successfully apply to court to have the judgment set aside.
If the deadline for you to apply to have the demand set aside has passed, you may apply for an extension of time to a Judge in the High Court or to a District Judge.
From the time you file the application to set aside the demand, the deadline for you to comply with it stops running.
In Form 6.5 you must say:
- when the demand was served; and
- why you believe it should be set aside.
You must file a copy of the demand with Form 6.4 and Form 6.5.
On receiving your application, the court may:
- dismiss it, without giving notice to the creditor if it believes there is no good reason for setting aside the demand; or
- grant the application to set aside the demand.
If the court dismisses your application, then the deadline for you to pay or secure the debt, which was suspended, will restart. So if there were 12 days to run when it was suspended, there will be 12 days to run now.
If the application to set aside the demand is not dismissed immediately, the court will fix a time for hearing the application and give 5 business days’ notice to:
- you or your solicitor;
- the creditor; and
- whoever is named in the demand as the person you should contact about the debt.
The court may grant the application to set aside the demand if:
- the debtor appears to have a counterclaim, set-off or cross-demand that is the same as, or more than, the amount that is in the demand; or
- the debt is disputed on grounds that the court thinks are substantial; or
- it appears that the creditor holds some security, such as a mortgage, that has not been disclosed or the court is satisfied that the value of any security is more than or the same as the amount claimed; or
- the court is satisfied on other grounds that the demand should be set aside.
The court will only set aside the demand if the debtor would suffer injustice from the creditor presenting a bankruptcy petition for the debtor’s non-compliance with the demand. So if the court believes the debtor would not suffer injustice, it will not set aside the demand.
The reason for which a bankruptcy petition may be presented is that the debtor has not complied with the terms of a statutory demand.
Technical or factual defects in a demand will not necessarily mean that the court will set it aside.
If the court dismisses the application to set aside the demand, it must make an order authorising the creditor to present a petition immediately or at a specified date.