MBS Recovery Limited v Kenneth George Quinney

Statutory demands closely connected with existing proceedings remain legally separate from those proceedings. Where the alleged debt depends on disputed and unclear pleadings, and the statutory demands advance inconsistent computations of that debt, they may be set aside as insufficiently clear and as falling outside section 267 of the Insolvency Act 1986. A judge may accelerate substantive consideration of statutory demands within a set-aside application where the parties have notice and there is good reason to do so. The court did not decide the general boundary between the insolvency jurisdiction and case-management powers under the Civil Procedure Rules.

MBS Recovery Limited issued two statutory demands against Kenneth George Quinney. They represented different, inconsistent computations of a debt said to arise from matters pleaded in existing Business and Property Courts proceedings.

Quinney applied to set aside the demands. ICC Judge Burton set them aside and ordered MBS Recovery to pay the application costs. MBS Recovery appealed on grounds concerning the certainty and clarity of the demands, the jurisdiction used by the judge, and summary assessment of costs. Permission to appeal was granted on all grounds. The central issues were whether the demands could properly be set aside, whether the judge had acted under the wrong procedural jurisdiction, and what order should be made as to costs.

1. Appeal dismissed. The order setting aside both statutory demands remained in force, and the costs order also stood. The costs of the appeal were to follow the event.
2. The statutory demands were separate from the existing Business and Property Courts proceedings, although the connection between them was exceptionally close. A statutory demand is not itself an initiating document; it is a step towards a bankruptcy petition.
3. The judge had acted under the insolvency jurisdiction arising under the Insolvency Act 1986 and the Insolvency Rules 2016, rather than under the Civil Procedure Rules. Ground 2 therefore failed. The court expressly left the general jurisdictional boundary between the insolvency rules and the CPR for a case in which it properly arose.
4. It was permissible for the judge to accelerate consideration of the statutory demands within the set-aside application. The parties had notice, and there was good reason to address the demands substantively.
5. The statutory demands were highly questionable because the alleged debts depended on a tenuous, incomprehensible and controversial link with the pleadings. They were insufficiently clear and fell outside section 267 of the Insolvency Act 1986. Grounds 1, 3 and 4 accordingly failed.
6. In the circumstances, the appropriate course would have been to seek summary judgment in the existing proceedings rather than issue statutory demands. The court inferred that summary jurisdiction had not been sought because the pleaded issues were not amenable to summary determination.

• Chancery Appeals: On 11 March 2025, the appeal from ICC Judge Burton’s order dated 18 March 2024 was dismissed. The order setting aside the statutory demands and the costs order remained in force.
• Permission to appeal: Mellor J granted permission on all grounds on 9 August 2024. Joanna Smith J had stayed the costs aspect of the order on 26 April 2024.
• First-instance insolvency decision: ICC Judge Burton set aside the statutory demands following Quinney’s set-aside application.