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Scare tactics

Landlords must take statutory demands seriously but they are often inappropriately used, says Anna-Liisa Walden

Housing associations (and other companies involved in construction) are finding themselves increasingly served with statutory demands, which are sometimes being used, for example by contractors, unjustifiably for debt recovery and scaremongering.

What are statutory demands?

Statutory demands are a mechanism by which the insolvency Act 1986. They are a formal written demand requiring payment of a specified sum, which must be more than £750, within 21 days.

What are the consequences?

If payment is not made within 21 days, the creditor can petition the court to wind up the housing association.

Can you resist a statutory demand?

Statutory demands shouldn’t be used in relation to ‘dispute debts’. So, if there is a justifiable reason for non-payment – for example, if works have not been completed, are defective or if the sum claimed is disputed – they can be resisted.

What should you do?

You may wish to seek an injunction to prevent a petition to the court for winding up if you have concerns. These are important documents which must be taken seriously by housing associations or any organisation in receipt of a demand. However they are not appropriate for claims involving a dispute and should not be use to inappropriately exert pressure, which could constitute an abuse of process.

For further information, please contact Anna-Liisa Walden