HASSAN ALI MAKKI v BANK OF BEIRUT S.A.L.

A statutory demand may be set aside where the debtor shows a genuine triable issue concerning a counterclaim, set-off or cross-demand which exceeds the debt. A cross-demand does not require mutuality between the parties’ claims. The fact that the statutory debt arises from a costs order does not prevent the court from setting aside the demand. For an unpersonally served demand, it must in fact come to the debtor’s attention as a statutory demand. The court may extend time where required, considering all the circumstances, including the prescribed limit’s purpose, the merits, the delay and prejudice.

Hassan Ali Makki applied under Rule 10.4 of the Insolvency (England and Wales) Rules 2016 to set aside a statutory demand served by Bank of Beirut S.A.L. The demand concerned an admitted costs debt of £209,616.34 arising from discontinued private prosecution proceedings.

Mr Makki relied on a substantially larger claim being pursued against the Bank in Lebanon, concerning dishonoured banker’s cheques. The issues included the date of service, extension of time, whether mutuality was required for a counterclaim, set-off or cross-demand, and whether the Lebanese claim raised a genuine triable issue.

1. The application succeeded and the statutory demand was set aside.

2. Under Rules 10.3(5) and 10.3(6) of the Insolvency (England and Wales) Rules 2016, a demand served other than personally must in fact come to the debtor’s attention as a statutory demand. Receipt of an unread email did not establish that the demand had come to the debtor’s attention. The court was entitled to determine the relevant date as 21 June 2021.

3. If an extension of time had been necessary, it would have been granted. The governing approach, stated in Rankin v Dissington Lending Co Ltd [2021] EWHC 172, required consideration of all the circumstances, including the purpose of the time limit, the merits, the reasons for delay and prejudice to each party. The requested extension was short, the delay was not deliberate, and the merits favoured the applicant.

4. Rule 10.5(5)(a) did not require mutuality. A set-off required claims between the same parties and in the same right. A counterclaim could exist without those requirements. A cross-demand was wider than either a set-off or a counterclaim. In any event, mutuality was present on the facts.

5. The test under Ashworth v Newnote Ltd [2007] BPIR 1012 (CA) was whether there was a realistic, rather than fanciful, prospect of success carrying some degree of conviction. The Lebanese claim was substantial, genuinely pursued, inherently credible and raised important disputed issues. The absence of expert evidence on Lebanese law prevented a final assessment of its merits, but did not justify treating the claim as hopeless.

6. Following Popely v Popely [2004] BPIR 778 (CA), the fact that the statutory debt arose under a costs order made no difference. Setting aside the demand did not invalidate or render unenforceable the costs order.

First-instance decision. No appellate history was stated in the judgment.