Setting aside a statutory demand—what should the order say? (Clarke v Cognita Schools)

Setting aside a statutory demand—what should the order say? (Clarke v Cognita Schools)

Where an application to set aside a statutory demand is dismissed on the papers, should the order contain a statement that the applicant has the right to apply to have the order set aside, varied or stayed? And if it should—but does not contain such a statement—what is the effect of that order?

Original news

Clarke v Cognita Schools Ltd [2015] EWHC 932 (Ch), [2015] All ER (D) 17 (Apr)

The appellant bankrupts applied for their bankruptcy orders to be set aside. This was on the basis that the orders dismissing their applications to set aside the statutory demands served on them did not contain a statement notifying them that they could apply to have the dismissal orders set aside, varied or stayed, which they submitted was required pursuant to the Civil Procedure Rules 1998, SI 1998/3132, 3.3(5) (CPR). Because of that, their applications to set aside the statutory demands were said to be outstanding at the time that the bankruptcy petitions were presented, meaning that the petitions should not have been presented in the first place and therefore that the bankruptcy orders should not have been made.

In dismissing the appeals, Newey J held that orders dismissing applications to set aside statutory demands—where such orders were made on the papers—did not have to notify the applicants that they could apply to have the orders set aside, varied or stayed. Even if he was wrong on that point, the absence of such notification did not mean the application to set aside the statutory demands could be said to be outstanding.

Briefly, what were the facts of this case?

Mr and Mrs Clarke were served with statutory demands by a judgment creditor.

Applications to set aside the statutory demands were made by Mr and Mrs Clarke on the ground that there was a discrepancy on the figures. However, their applications were dismissed on the papers pursuant to

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About the author:

Stephen qualified as a solicitor in 2005 and joined the Restructuring and Insolvency team at Lexis®PSL in September 2014 from Shoosmiths LLP, where he was a senior associate in the restructuring and insolvency team.

Primarily focused on contentious and advisory corporate and personal insolvency work, Stephen’s experience includes acting for office-holders on a wide range of issues, including appointments, investigations and the recovery and realisation of assets (including antecedent transaction claims), and for creditors in respect of the impact on them of the insolvency of debtors and counterparties.