If you’re owed money, you want paying quickly. And if appropriate to the circumstances, the statutory demand is often the best tool at your disposal.
Serving a statutory demand is an aggressive tactic to adopt to recover a debt. It ups the ante and is often much more effective than a threat to issue a standard Court claim. However, it’s not appropriate in cases where there’s a genuine substantial dispute as to liability.
Often debtors will argue that there’s a dispute such that the demand should be withdrawn immediately and substituted for a Court claim. There are good reasons for doing this: a standard Court claim more often than not involves significant costs (more so than ever now that Court fees have been hiked up) and delay, meaning that it is an unattractive option to the creditor looking to get paid promptly!
By disputing the debt, the debtor can force the creditor into a position where his options are limited to issuing a standard Court claim and this opens the door for the debtor to negotiate a reduced settlement.
A real case demonstrating the value of the statutory demand
Sherrards recently acted in a matter where the debtors (husband and wife) owed just shy of £100k for estate agency fees. We served statutory demands and the debtors raised what on the face of it, appeared to be a credible defence. They applied to the High Court to have the demands set aside but they lost. On careful analysis of the evidence, it was clear that the debtors had done no more than raise a “cloud of objections” in an attempt to obfuscate the issues and force our client to take the Court route. At the eventual hearing, the High Court Registrar threw out the applications and ordered the debtors to pay Sherrards’ client’s costs (about £12k).
So even if there is a dispute, it is still worth considering the statutory demand route if it appears that the ‘dispute’ lacks real substance.