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Not been a happy bunny this Easter? With outstanding debtors not paying up who can blame you.

Kidwells Litigation Team explains why following due process on service of documents always counts; in this case we look at the recent High Court decision in Canning v Irwin Mitchell LLP in respect of pursuing debtors in issuing Bankruptcy proceedings …

Law firm, Irwin Mitchell, attempted to serve a bankruptcy petition on a former client. This was in connection with monies owed for legal services provided.

The firm initially hand-delivered the first statutory demand to an address based in Cornwall. To which they received no response. Some weeks later, a bankruptcy petition followed. The firm claimed that they had taken ‘all reasonable steps’ to bring the statutory demand to their client’s attention. The address was, in fact, the registered office of a company of which Canning had been a director. The district judge found that Mr Canning had been deprived of the opportunity to set aside the statutory demand. This was despite the fact that his application to do so would have been bound to fail in any event, with the result that no serious prejudice was sustained.

However, by reason of the failure to serve the statutory demand, the judge ruled that there had been no proper basis for the presentation of the bankruptcy petition adding;

There was a fundamental failure to effect service; in no meaningful sense could Mr Canning be said to have been served with the statutory demand, which never reached him, or came within his dominion.

He said that the real connection of the debtor to the service address was ‘extremely tenuous’ and there was no room for discretion. The High Court, therefore, dismissed the bankruptcy petition lodged by Irwin Mitchell.

This is an interesting case which teaches us a clear lesson. Namely the risk of presenting a bankruptcy petition based on defective service of the compulsory statutory demand, highlighting that a failure to serve a statutory demand on a debtor is fatal to a bankruptcy petition succeeding. This is even if any application by the other side to have it set aside was inevitably going to fail.

Our specialist and experienced Debt Recovery team have created a tailored, streamlined process for managing your debt recovery matters smoothly and pragmatically to ensure that errors like this are always avoided. Please feel free to get in touch with one of our Litigation team members for a free initial consultation.

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