Knight v ABV Recycling Ltd

On an application to set aside a statutory demand, the debtor must show a genuine dispute on grounds that appear substantial. The evidence must identify the real ambit of the dispute; bare assertions that documents are absent, orders were not written, or liability is denied may be insufficient where the creditor’s documents provide a coherent account. The court may also decline to set aside a demand where the amount not shown to be disputed on substantial grounds exceeds the statutory minimum, even if the demand is overstated.

Bradley Knight appealed against the decision of District Judge Cross in the St Albans County Court, dated 18 November 2013. The District Judge had dismissed Mr Knight’s application to set aside a statutory demand issued by ABS Recycling Ltd.

The demand concerned approximately £4,200 allegedly due under a personal guarantee given for debts of Vast Group Holdings Plc, arising from waste-disposal services. The issues were whether there was a substantial dispute about the authenticity of the guarantee and whether there was a substantial dispute about the company’s liability for the invoices.

1. Appeal dismissed. The court held that the District Judge was entitled to conclude that there was no genuine dispute on substantial grounds concerning the personal guarantee. The creditor’s account was coherent: the company had applied for credit, the creditor had requested a director’s guarantee, and a guarantee form had apparently been returned completed and signed.

2. The absence of expert handwriting evidence did not prevent the court from considering the apparent similarity between the handwriting on the guarantee and the credit application. Mr Knight’s failure to give a clear explanation of how the completed guarantee had come into the creditor’s possession was a relevant consideration. The suggestion that the guarantee had been fabricated was inherently unlikely on the evidence.

3. At least £1,002 of the invoices was not shown to be disputed on substantial grounds. The two relevant items had been expressly ordered in writing and were accepted by Mr Knight. In such circumstances, relying on Interframe Limited v Brown [2005] EWHC 3527 (Ch), the court stated that an overstated debt will not normally justify setting aside a statutory demand where the undisputed, or insufficiently disputed, amount exceeds the statutory minimum of £750.

4. The remaining challenges also failed to demonstrate a substantial dispute. Where services were ordered or accepted and the creditor produced tickets or other prima facie evidence of provision, the debtor had to explain in some detail why the sums were not due and identify the ambit of the dispute. It was insufficient simply to say that no written order or signed ticket had been produced.

5. The court considered it plausible that a site manager had authority to order services for the company. Even if the creditor was not obliged to act on verbal orders, supplying services in response to such orders would not permit the company to retain their benefit without payment. The evidence concerning waste delivered in vehicles recorded as being used for Vast Group also provided prima facie evidence of company liability. The appeal was therefore dismissed.

• High Court (Chancery Division): Mr Justice Nugee dismissed the appeal against the decision of District Judge Cross dated 18 November 2013.
• St Albans County Court: The District Judge dismissed the application to set aside the statutory demand.