Dacorum Borough Council v Horne

An instalment order ordinarily stays execution only while its terms are observed. Default in payment makes the balance of the judgment debt immediately payable, unless a further order provides otherwise. A statutory demand under section 268(1) of the Insolvency Act 1986 may therefore be served for the immediately payable debt.

Rule 6.1(1) of the Insolvency Rules 1986 does not require the named authorised person to write the signature personally. A person may sign in another’s hand where the necessary authority exists. The rule requires the demand to purport on its face to be signed by the creditor or by a person stating that he is authorised.

Dacorum Borough Council obtained a county court judgment against Christopher Horne as guarantor. The judgment debt was made payable by instalments, and a later consent order varied the instalments until a review on or after 20 September 1995. Horne made substantial default, and no further order was made.

The Council served a statutory demand under section 268(1)(a) of the Insolvency Act 1986. Horne applied to set it aside, arguing that the debt was not immediately payable and that the demand was invalid because the named officer had not personally written the signature. The District Judge dismissed the application and made a bankruptcy order. His Honour Judge Weeks QC allowed Horne’s appeal, set aside the demand and annulled the bankruptcy. The Council appealed.

1. Appeal allowed. The order of His Honour Judge Weeks QC was set aside, and the bankruptcy order made on 22 March 1999 was restored.
2. Under section 71(1) of the County Courts Act 1984, an order for payment by instalments stays execution under section 86 only while the instalments are maintained. It does not suspend or stay the judgment itself. A separate stay or suspension requires the exercise of the discretion under section 71(2).
3. Under the statutory scheme and Order 26 of the County Court Rules 1981, default in one instalment permits execution for the whole remaining judgment debt. For purposes beyond execution, the balance likewise becomes immediately payable unless a further order provides otherwise. If instalments are ordered only for a specified period and would not discharge the debt, the remaining balance becomes payable at the end of that period unless the court makes a further order.
4. The order of 1 October 1994 did not postpone those consequences. Its provision for review on or after 20 September 1995 identified the instalment period and recognised the need for a further order if immediate enforcement was to be avoided. Horne’s defaults made the balance immediately payable no later than 20 December 1994.
5. A statutory demand under section 268(1)(a) is inappropriate only where the debt is not immediately payable. Where that defect is established, the demand may be set aside under rule 6.5(4)(d) of the Insolvency Rules 1986.
6. Rule 6.1(1) does not impose a personal-handwriting requirement. Applying London County Council v Agricultural Food Products Ltd [1955] 2 QB 218, a person may sign by the hand of another authorised to sign on his behalf. The named officer must have authority to make the demand, or his act must be ratified, and the person reproducing the signature must also be authorised. Those are requirements of the general law, not additional formal requirements imposed by the rule.
7. The statutory demand was therefore valid, and the District Judge was right not to set it aside.

• Court of Appeal (Civil Division) [2000] EWCA Civ 178: allowed the Council’s appeal, set aside the High Court order and restored the bankruptcy order.
• High Court, Chancery Division: His Honour Judge Weeks QC allowed Horne’s appeals, set aside the statutory demand, dismissed the bankruptcy petition and annulled the bankruptcy.
• County Court: the District Judge dismissed Horne’s application to set aside the statutory demand and made a bankruptcy order on 22 March 1999.