Anderson v Kas Bank NV & Anor

A statutory demand is duly served where the creditor does all that is reasonable to bring it to the debtor’s attention, including following the steps ordinarily supporting substituted service. A debtor cannot establish a substantial dispute merely by pointing to unexplained account entries after acknowledging the debt and making payments towards it. A cross-claim must be supported by evidence and, where relevant, must reduce the debt below the bankruptcy threshold. Failure to give notice of the date for handing down judgment does not require a bankruptcy order to be set aside without evidence of substantial injustice or prejudice.

The appellant appealed against a bankruptcy order made by the Kingston-upon-Thames County Court on a petition by KAS Bank NV. The grounds concerned service of the statutory demand, the alleged dispute over the debt, alleged cross-claims exceeding the petition debt, and the absence of notice of the date on which judgment would be handed down.

The debt arose from securities trading accounts maintained with KAS. The appellant had acknowledged the amount claimed, agreed repayment arrangements and made payments towards it, but later sought to challenge the balance and assert claims for excessive commission and unreclaimed Irish stamp duty.

1. Service of statutory demand. Service of a statutory demand is a necessary pre-condition to presentation of a bankruptcy petition unless the statutory exception for a judgment debt applies. Under Rule 6.3(2) of the Insolvency Rules 1986, the creditor must do all that is reasonable to bring the demand to the debtor’s attention and, where practicable, effect personal service. The process server had followed the steps identified in paragraph 11.4 of the Practice Direction on Insolvency Proceedings. In the circumstances, including the debtor’s failure to correct the creditor’s understanding of his address, the demand was duly served.
2. Dispute as to the debt. The debtor had acknowledged the debt, agreed to pay it, and made substantial payments towards it. His later inability to reconcile statements and contract notes did not disclose a substantial dispute. The court below was entitled to treat those points as having no substance.
3. Cross-claims. The alleged commission claim was unsupported by evidence of the contractual commission terms. The alleged Irish stamp-duty claim was unsupported by evidence that the relevant trades qualified for repayment or that KAS, rather than the former broker, bore responsibility for claiming it. In any event, the alleged claim would have left a substantial debt above the bankruptcy level.
4. Handing down judgment without notice. It was regrettable that the debtor was not given advance notice of the date on which judgment would be handed down. However, a debtor has no right to an adjournment in order to pay the debt. The bankruptcy order would be set aside only if the procedural failure caused substantial injustice or prejudice. No evidence showed that the debt could have been paid within seven days or any other period.
5. The appeal was dismissed.

High Court (Chancery Division): Appeal from the bankruptcy order made by the Kingston-upon-Thames County Court on 8 May 2003. The appeal was dismissed.