In order for Legal Documents to be correct they must be served formally on the recipients named in them. Recently, a petition for bankruptcy was dismissed in court because a statutory demand ended up being delivered to a property at which the debtor named in the judgment had never resided.
An established business had managed to get a default judgment against one of their previous clients as considerable fees were outstanding and needed settling. The company successfully raised a statutory demand for the amount due and took on the services of a debtor tracing professional to find the person who owed the money.
The company was informed that the debtor had been found, living at an address in Cornwall. The business instructed a process server to deliver the demand through the letterbox of the address. Having received no response from the statutory demand delivery a bankruptcy petiton was issued.
The debtor responded and categorically denied outright that they had never resided in Cornwall and had plenty of supporting evidence to prove his actual address was a considerable distance away – in Essex! Therefore, this meant he had no knowledge of the demand being issued.
A district judge however still proceeded to let the business continue with the bankruptcy petition on the grounds that the debtor knew of the judgment, and regardless as to wether he had received the demand or not, no prejudice was inflicted on the debtor.
The debtor took the matter to the High Court, who upheld his challenge to the district judge’s ruling and referred to Section 268(1) of the Insolvency Act 1986 which has strict rules and boundaries in place. As the statutory demand was not served within the constraints of the Insolvency Act, discretion was not permitted and therefore the bankruptcy petition was dismissed.