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HHJ Marquand, sitting at the Wandsworth County Court, dismissed an appeal against a Civil Penalty Notice, in the total amount of £90,000 issued to a sole trader following an unannounced immigration visit to the business premises, a garage in South London.  As a first breach, the maximum penalty was £45,000 per worker.  Two men were found working at the garage when the Home Office visited.

On appeal, the employer claimed that one of the men was his brother and that he was not working but simply visiting. The employer admitted that the second man was working but claimed that he was there working for another business operating from the same garage.

Tony Muman was instructed for the Secretary of State to defend the appeal.

Following trial, HHJ Marquand rejected the employer’s claim and found that the two men were employed under a contract of service and endorsed the civil penalty. He also ordered the employer to pay the Secretary of State’s costs.

Invalid appeal?

The legislative scheme works in the following way:

A Civil Penalty Notice is issued under s.  15(2) of the Immigration, Asylum and Nationality Act 2006. It must be in prescribed form: s. 15(6).

Section 16 applies where an employer to whom a penalty notice is given objects on grounds including that he is not liable to the imposition of a penalty. This is referred to a notice of objection: s. 16(2). A Civil Penalty is usually accompanied by a proforma form for an objection to be made. The objection does not, however, have to be made using the form but must be given in the prescribed manner: s. 16(3)(c). Provided all the information that is required to be given, is given; an employer can object by simply writing to the Home Office. It is sensible to ensure that the objection is signed (‘I confirm that the above information is correct to the best of my knowledge’).

Under s. 17(1), an employer to whom a penalty notice is given may appeal to the County Court. It is important to remember that the decision giving rise to the appeal is the penalty notice, and not the objection outcome notice. The latter is unappealable; the former is appealable.

An appeal is commenced by completing an Appellant’s Notice (Form N161), which must identify the correct date of the decision being appealed.

The appeal is a rehearing of the Secretary of State’s decision to impose a civil penalty. It is not a rehearing of the objection outcome notice.

The Secretary of State is then required to determine the objection: s. 16(4). She can cancel the penalty, reduce the penalty, increase the penalty, or decide to take no action (i.e., to maintain the penalty).

Under s. 17(4A), an appeal against the penalty notice may only be brought if the employer has given a notice of objection under section 16 and the Secretary of State has determined the objection.

Under s. 17(4B), an appeal must be brought within the period of 28 days beginning with the relevant date.  The relevant date is the date specified in the objection outcome notice issued in accordance with s. 16(5)(b) as the date on which it was given: s. 17(4D).  This date is important. It is a statutory time limit and one that Parliament has decided cannot be extended.

In this case, the employer filed the N161 within the 28-day limitation period, and it was issued by the court.

Under section 2 of the N161, the date of the decision appealed was said to be 5 March 2025. This was, in fact, the date of the objection outcome notice. There is no statutory right to appeal the objection outcome notice. Parliament has crafted a scheme allowing for the appeal against the penalty notice only: s.17(1).

This omission, which may have been fatal, was perhaps saved by section 5 of the N161, which confirmed that the appeal was against the civil penalty notice.

Section 6 of the N161 confirmed that the grounds of appeal were attached. Section 7 of N161, which relates to skeleton arguments, was left blank.

Section 9 of the N161, dealing with the order sought from the County Court, was completed.

Section 10 of the N161 deals with ‘other applications’.

Section 11 of the N161 is for reasons and evidence in support of any section 10 application. Both sections are mutual. In this appeal, because there was no application sought, sections 10 and 11 were left blank.

The form then proceeds to require a signature underneath a Statement of Truth. In express terms, the Statement of Truth must be completed in support of the evidence in section 11. Absent a section 10 application, the need for a section 11 Statement of Truth is redundant.

In this appeal, despite not making a section 10 application, the employer signed and dated the Statement of Truth.

Section 14 of the N161 is the operative part for an appellant’s signature. By signing the form at section 14, an appellant confirms that the form is complete and is no longer a draft. It is an important final procedural step in any appeal. The failure to sign the form is a serious omission.

In this appeal, section 14 was not signed. What appears to have happened is that the employer signed the Statement of Truth in the mistaken belief that this was the signature required by the form.

In Nathadwarawala v General Medical Council [2025] EWHC 459 (Admin), the GMC raised a jurisdictional objection to an appeal on grounds that the appeal had not been brought within the statutory 28-day period for appealing to the High Court. Whilst the N161 had been submitted and the fee paid a few days before the 28-day period expired, it was not signed, and the signature box was blank. The appellant sought to correct his mistake reasonably promptly after the error was pointed out to him by the court’s administrative staff, but by then the 28-day appeal period had already elapsed. The GMC argued that the court did not have the power to extend the time for bringing the appeal.

The High Court decided that (1) the appellant’s submission to the Administrative Court Office of an unsigned N161 did not suffice to constitute the bringing of an appeal within the 28-day period; (2) the absence of a signature was a serious omission, and (3) in the circumstances, the court had no power either to treat the appeal as having been brought within time or to extend time. As such, the court lacked jurisdiction to entertain the late-filed appeal, which fell to be dismissed regardless of its substantive merits.

In General Medical Council v Konathala [2025] EWHC 1550 (Admin), the N161 was filed on behalf of the GMC with sections 1 to 13 fully completed, including a signed and dated Statement of Truth prior to the expiry of the 28-day appeal period. The GMC had failed to sign the signature box at Section 14 of the N161 and made no attempts to correct this failure at any stage. Despite the lack of signature, the GMC’s N161 was sealed by the court office within the 28days. Following this, a hearing date was fixed, and hearing bundles and skeleton arguments were filed by both parties. During these procedural stages of the appeal, neither the court nor the parties raised the fact that section 14 of the N161 had not been signed.

Having realised the error, the respondent argued that, in line with Nathadwarawala, the lack of a signature meant that the GMC’s appeal was invalid and that the court had no jurisdiction to hear the appeal.

The GMC submitted that the factual position was vastly different to that in Nathadwarawala. The N161 was signed by the GMC solicitor, albeit at the statement of truth section, whereas in Nathadwarawala, there was no signature anywhere on the form. Therefore, the statement of truth signature was sufficient to indicate that the N161 was complete, as demonstrated by the fact that the court office issued the appeal.

The High Court held that because the court office had issued the GMC’s N161, the appeal proceedings had begun in accordance with CPR.r.7.2, and as such the court could, on application, exercise its discretion under CPR.r.3.10 to remedy the GMC’s omission to sign the box in section 14 of the form.

There appears to be some tension between the two decisions. In the end, given his findings on the substantive issue, the Secretary of State did not press HHJ Marquand to rule on validity as a preliminary issue and the point remains live for another case.

Tony Muman is an expert in civil penalty cases.  For any booking enquiries, please contact the civil clerk at civil@halcyonchambers.com

The views stated in this article belong to the writer and no warranty is given, express or implied, in respect of the accuracy of the contents of this article. Nothing in this article is tendered as or is intended to be legal advice and the contents should not be construed or relied upon as legal advice. Specialist legal advice should always be taken in every case, noting that the application of the law may vary according to the individual facts of the case and the nature of the dispute.

Sonya Kalyan recently secured a significant victory before the First-tier Tribunal (Immigration and Asylum Chamber), successfully representing two Iraqi Kurdish brothers in linked asylum appeals. The case was both factually and legally complex, involving deeply rooted family, tribal, and political dynamics in the Kurdish region of Iraq. The outcome underscores the value of strategic case management, rigorous preparation, and fearless advocacy in crucial immigration litigation.

Due to the sensitive nature of the appeals, anonymity orders were granted to protect the appellants’ identities. Their names remain withheld in this article in accordance with Tribunal procedure and to ensure their safety.

Background and Factual Matrix

The brothers appealed refusals of their asylum claims, each grounded in a well-founded fear of persecution. Their fears stemmed from a longstanding family debt and a broken marriage arrangement with MB, a powerful figure affiliated with the Kurdish Democratic Party (KDP). They also feared forced military recruitment and violent reprisals from MS, a senior official associated with the Patriotic Union of Kurdistan (PUK).

While the Home Office accepted their nationality and ethnicity, it disputed whether the brothers faced a personal risk, raising concerns about credibility and arguing that state protection or internal relocation were viable alternatives.

Legal Framework

The appeals were determined under the Refugee Convention, as it stood prior to the implementation of the Nationality and Borders Act 2022. The Convention protects individuals who are outside their country of nationality and unable or unwilling to return due to a well-founded fear of persecution on account of race, religion, nationality, political opinion, or membership of a Particular Social Group. The applicable standard of proof, “a reasonable degree of likelihood” is lower than the criminal threshold but still demands consistency and credibility. See MAH (Egypt) v Secretary of State for the Home Department [2023] EWCA Civ 216.

Strategic Use of Linked Appeals

Recognising that both claims arose from the same factual matrix, Sonya represented the brothers in linked appeals, ensuring a coherent and unified approach. With no conflict of interest, she was able to advocate vigorously for both clients throughout the proceedings. Linking the appeals allowed for consistent findings, reinforced credibility, and avoided duplication of evidence.

The case demanded meticulous fact-finding and careful handling of sensitive material, including detailed witness statements and live testimony delivered through Kurdish Sorani interpreters. Sonya maintained a clear focus on presenting a credible and consistent narrative, supported by extensive country guidance and legal authority.

Particular Social Group (PSG) and blood feud risk

The Tribunal relied on the Country Policy and Information Note: Iraq – Blood feuds, honour crimes and tribal violence (July 2024), which confirms that individuals caught in blood feuds may constitute a PSG.

Drawing on the authority of EH (Blood Feuds) Albania [2012] UKUT 348 (IAC), the Tribunal found that the brothers, as members of a Kurdish family embroiled in a violent dispute with Barzani and later Sangawi, clearly fell within such a group. The risk of targeted harm was real and ongoing.

State Protection and Internal Relocation

In assessing whether the Iraqi and Kurdistan Regional authorities could offer effective protection, the Tribunal applied the principles from Horvath [2000] UKHL 37. The evidence, including findings in SMO & KSP (Civil Status Documentation; Article 15) Iraq CG [2022] UKUT 110 (IAC), demonstrated that law enforcement in the region often avoids tribal disputes, sometimes takes sides, and operates within a system where corruption is rife. The Judge accepted that MS’s influence over the Kurdistan Regional Government rendered any approach to the authorities futile.

Internal relocation was also deemed unreasonable. The brothers spoke only Kurdish and had no connections in Arabic-speaking areas such as Baghdad. Moreover, the pervasive tribal influence and cooperation between the Iraqi and Kurdistan Regional governments meant there was no part of the country where they could genuinely be safe.

Advocacy in a complex legal context

Sonya’s advocacy was instrumental in navigating the legal and evidential complexities of the case. She addressed the Home Office’s challenges to credibility with precision, offering clear and persuasive explanations for any discrepancies, including those relating to financial figures and timelines. Her submissions demonstrated that the brothers’ membership of a PSG exposed them to blood feud violence, and that neither state protection nor internal relocation could mitigate the risk.

Sonya relied on up-to-date country guidance and relevant case law to substantiate the claims, ensuring that the Tribunal fully appreciated the lived realities and nuanced threats faced by the appellants.

Tribunal’s findings on credibility

The Tribunal made unusually strong credibility findings in favour of the brothers. It found them to be honest and reliable witnesses, whose accounts were internally consistent, inherently plausible, and supported by country evidence.

The Judge accepted their account in full, including their father’s debt to Barzani, the arranged marriages of their sisters to settle the debt, their decision to renege on that agreement and flee, their temporary refuge with MS, his coercion to join the peshmerga, and the death threats they received upon leaving. These events were corroborated by general country evidence on blood feuds, tribal honour disputes, and the political influence wielded by MS.

Although the brothers had not claimed asylum en-route to the UK, the Judge accepted their explanation and concluded that this did not undermine the core of their account.

Determination and legal outcome

Having considered all aspects of the case, the Tribunal concluded that both brothers had a genuine and well-founded fear of persecution for a Convention reason. It found that they could not obtain protection from the Iraqi or Kurdistan Regional authorities, and that internal relocation was not a viable option. Their removal would breach the UK’s obligations under the Refugee Convention and Article 3 of the European Convention on Human Rights (ECHR). In the alternative, removal would also breach Article 8 ECHR due to the very significant obstacles to reintegration.

Conclusion

This case illustrates the importance of comprehensive case management and fearless representation in asylum claims involving intersecting political, social, and familial complexities. Sonya’s approach, grounded in legal precision, cultural sensitivity, and strategic advocacy, was central to the successful outcome.

Sonya continues to accept instructions in complex immigration and asylum matters, including those involving linked appeals and challenging country contexts.

To instruct Sonya, please contact the chambers’ immigration clerk at immigration@halcyonchambers.com.

The views stated in this article belong to the writers in a personal capacity.  No warranty is given, express or implied, in respect of the contents of this article.  Nothing in this article is tendered as or is intended to be taken as legal advice and the contents should not be construed or relied upon as legal advice.  Specialist legal advice should always be taken in every case noting that the application of the law may vary according to the individual facts of the case and the nature of the dispute. 

Halcyon Chambers is delighted to announce that Paige Procter-Harris has accepted an offer of tenancy.

This comes after successful completion of pupillage under the supervision of Suzanne Hodgkiss and Inderjit Thind.

During her Pupillage year, Paige gained experience in Chambers’ core specialist areas including Civil and Family Law. Paige has proved incredibly popular with our Instructing Solicitors and already has experience of work above the level of her Call.

Everyone at Halcyon Chambers welcomes Paige as a Member of Chambers and we look forward to seeing her career grow over the coming years.

Any enquiries in relation to the availability of Paige should be directed to the Clerks.

Miss Gonzalez-Jaspe recently represented an applicant Father in the third set of s.8 Children Act proceedings where allegations of domestic abuse, including abuse of two children, were made against him.

An unusual feature of this case is that the respondent Mother’s principal allegation of physical abuse was not only in respect of a non-subject child (NSC) but was in respect of an alleged incident of which the Mother had no direct knowledge and could not, therefore, give direct evidence about. By the time the court had considered the allegations at a fact-finding hearing, the Father had been under police investigation for this allegation for some two years.

In the first set of proceedings, the Mother had alleged (inter alia) that the Father was coercive and controlling throughout, and since, their relationship. Following a fact-finding hearing in those proceedings, the Court found the allegations against the Father not proven. This allegation was being reconsidered by the Court following the decision in H-N [2021] EWCA Civ 448 which now requires the Court to focus on the wider context of whether there has been a pattern of coercive and controlling behaviour, as opposed to a list of specific factual incidents that are tied to a particular date and time, since abusive, coercive and controlling behaviour is likely to have a cumulative impact upon its victims which would not be identified simply by separate and isolated consideration of individual incidents.

In the second set of proceedings, the Mother alleged that the Father had acted inappropriately toward the subject child. She then withdrew that allegation but raised it as a continuing concern within these proceedings.

Evidence was heard over three days. Due to the Court not hearing evidence from the NSC or their mother, Miss Gonzalez-Jaspe made lengthy submissions in respect of the principal allegation which required a detailed analysis of the police and medical disclosure, multiple witness statements from the NSC’s mother, ABE interview of the NSC and police interview of the Father as well as various audio and video footage.

Miss Gonzalez-Jaspe was successful in persuading the court that the principal allegation, as alleged, was not proven. Further, the allegation of inappropriate behaviour toward the subject child, and the allegation of coercive and controlling behaviour toward the Mother were also not proven on the balance of probabilities.

Miss Gonzalez-Jaspe frequently represents parties in cases that involve serious allegations of domestic abuse and abuse toward children. She takes a sensitive but robust approach to her advocacy and client management in such matters.

Article by Sonya Kalyan

The question before the Supreme Court in this case was:

‘When will a refusal by the Secretary of State for the Home Department (“SSHD”) to grant Leave to Remain (“LTR”) to an individual, who cannot be removed to their country of nationality, breach their right to respect for private and family life under Article 8 of the European Convention on Human Rights (“ECHR”)?’

Relevant Law and Immigration Rules

• Article 8 ECHR
• 1(5)(a) of Schedule 10, Immigration Act 2016
• Paragraph 276ADE, The Immigration Rules (as applicable at the relevant time, now replaced by Appendix Private Life)
• Section 117A- 117C, Nationality, Immigration and Asylum Act 2002

Background Facts

AM is a Belarusian national who arrived in the UK in 1998 and claimed asylum. His asylum claim was refused on 12 December 2000, and he was deported to Belarus on 29 June 2001. As AM told the Belarussian authorities that he was not a Belarussian citizen, he was refused entry and returned to the UK. Attempts by the SSHD to obtain necessary travel authorisations for AM from Belarussian authorities failed and he remains in the UK. Between 1999 and 2018, AM was also convicted of a number of offences and sentenced to several terms of imprisonment. AM was present in the UK without LTR, but he was able to reside in the community because he had been granted immigration bail under paragraph 1(5)(a) of Schedule 10 to the Immigration Act 2016, this was known as AM’s ‘limbo’ status. AM suffered from ill-health. In early 2018, he was diagnosed with psychotic symptoms and his mental health has been adversely affected by delays in resolving his case and lack of status.

Decisions and comment

In R (AM) v SSHD (legal ‘limbo’) [2021] UKUT 62 (IAC) a Presidential panel of the Upper Tribunal (“UT”) held that, as the likelihood of removing AM to Belarus was remote, continuing to refuse to grant AM LTR would be a violation of his right under Article 8 ECHR.

The SSHD appealed to the Court of Appeal and his appeal was dismissed.

The SSHD appealed to the Supreme Court.

Lord Sales found [95] that the UT failed to give any significant, let alone proper weight, to the deliberate actions of AM in contributing to the situation in which he had limbo status as a material factor in its proportionality analysis. Furthermore [96] the UT erred in its assessment of the strength of the public interest that AM should be removed and, if that was not possible, that he should be maintained by the state with limbo status rather than granted LTR.

On considering Private Life 276ADE of the Immigration Rules (as applicable at the relevant time, now replaced by Appendix Private Life) and the potential impact of circumvention of immigration controls, the Court noted that the UT had made an additional error in evaluating the public interest in the individual’s removal. If removal was not possible, the individual would remain in a state of limbo, dependent on the State, rather than being granted LTR. The Court emphasised that Paragraph 276ADE reflects the SSHD’s policy on granting LTR when specific conditions are met and does not address the weight of the public interest in enforcing immigration controls for the broader application of Article 8. Therefore, the UT’s reliance on Paragraph 276ADE was misplaced.

An individual who has lived illegally in a country for twenty years is typically eligible to apply for legal status under Immigration Rules. However, AM was ineligible for this option due to his criminal record, which disqualified him based on the suitability criteria for that pathway. As a result, he had to depend on human rights grounds for his case.

When an individual’s state of limbo results from circumstances beyond their control, or they are destitute, have genuine prospects of employment, or have established personal or family ties, the issue remains one of proportionality, meaning the outcome is not guaranteed. Even if an individual’s limbo status is entirely self-inflicted, there is no legal rule that precludes a proportionality assessment.

Consequently, [104] it fell to the Supreme Court to determine whether Article 8 obliged the SSHD to grant LTR to AM. Whilst Lord Sales found that Article 8 was engaged [107], he found that the decision to maintain AM in limbo was in accordance with law [108] and was proportionate in that the decision struck a fair balance between AM’s rights and interests and the general interest of the community in the state maintaining effective immigration controls and focusing state benefits and other resources on citizens and lawful immigrants [117].

Lord Sales added that granting AM LTR would create an incentive for others to do their best to obstruct their removal as well, ‘thereby directly undermining the due operation and enforcement of the United Kingdom’s immigration controls’.

Outcome

The Supreme Court allowed the SSHD’s appeal and dismissed AM’s claim under Article 8 ECHR to be granted LTR.

It will be interesting to observe how this precedent is applied in future cases, particularly in the context of the Illegal Migration Act 2023. The new legislation prohibits the government from granting immigration status to anyone who has entered the country illegally after 7 March 2023. However, an exception exists if refusing the grant of status would violate an individual’s human rights, in which case Article 8 ECHR and sections 117A to 117C of the Nationality, Immigration and Asylum Act 2002 must be considered.

Article by Thomas Wheeler

This is a case note on the recent case of Matthew Robert Haw, Diana Frangou (As joint administrators of QM Systems Limited (in administration) v QM Systems Limited (In Administration) [2024] EWHC 1944 (Ch).

It concerned an application by the joint administrators to confirm the validity of their appointment as joint administrators, pursuant to paragraph 63 of Schedule B1 to the Insolvency Act 1986 and Insolvency Rule 12.64.

The issue the joint administrators had in this case, was that the Notice of Appointment, pursuant to Insolvency Rule 3.24, had the following errors:

1. the heading of the notice of appointment form incorrectly suggested that the Company appointed the Applicants rather than the directors of the Company;
2. only one, as opposed to three copies of the NOA were filed at court; and
3. the Notice of Appointment failed to exhibit the consent given by National Westminster Bank Public Limited Company, being the holder of a qualifying floating charge over the Company’s property.

Legal Background

Paragraph 63 of Schedule B1 to the Insolvency Act 1986 provides that “the administrator of a company may apply to the Court for directions in connection with his functions.”

It has long been established that an administrator of a company can apply to the Court pursuant to this paragraph seeking an order confirming the validity of their appointment – see the decision of Marcus Smith J in Eason & Anor v Skeggs Beef Ltd [2019] EWHC 2607 (Ch).

Pursuant to Insolvency Rule 12.64:

”No insolvency proceedings will be invalidated by any formal defect or any irregularity unless the court before which objection is made considers that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of the court.”

The above provisions formed the basis of the joint administrators’ application to the Court. As stated above, there were issues with the Notice of Appointment which had been filed. Therefore, the Court had to look at the rules in relation to those particular issues.

First, the Notice of Appointment had incorrectly stated that the company had appointed the administrators and not “the directors of the company”. Pursuant to rule 3.24(1):

“Notice of an appointment under paragraph 22 of Schedule B1 (when notice of intention to appoint has been given under paragraph 26) must be headed “Notice of appointment of an administrator by a company (where a notice of intention to appoint has been given)” or “Notice of appointment of an administrator by the directors of a company (where a notice of intention to appoint has been given)” and must contain …” [Emphasis added].

There is then a list of requirements from (a) to (j) which prescribe the required information. (b) is of note:

“A statement that the company has, or the directors have, as the case may be, appointed the person names as administrator of the company.”

Second, pursuant to Insolvency Rule 3.26(1) there must be three copies of the Notice of Appointment filed with the Court (in this case there was only one), and that must be accompanied by the written consent of all those persons to whom notice was given (National Westminster Bank PLC’s consent was not attached).

As such, the Court needed to determine whether the Notice was defective such that it was a nullity, or could be cured.

Decision

HHJ Michael Berkley (sitting as a Judge of the High Court), hearing the application, came to the following decision.

The Judge set out the three categories concerning defective out-of-court administration appointments, as set out by Marcus J in Eason at [21]:

“(1) Cases where the defect is fundamental. In such cases, the purported administration appointment is a nullity. There are no insolvency proceedings on foot, and so there is nothing that the court can cure.

(2) Cases where the defect is not fundamental and causes no substantial injustice. Rule 12.64 of the Insolvency (England and Wales) Rules 2016 provides […]

Thus, provided the defect is not fundamental (i.e. not falling within paragraph 21(1) above), so that there are indeed insolvency proceedings on foot, the court must first satisfy itself that the defect or irregularity has caused no “substantial injustice”. If so satisfied, then the proceedings will not be invalidated by any formal defect or irregularity.

(3) Cases where the defect is not fundamental, but substantial injustice is caused. If the defect – again, not being a fundamental defect within paragraph 21(1) above – is found to cause “substantial injustice”, then the court must ask itself whether that substantial injustice can be remedied by an order of the court. Of course, the court will consider, in light of all the circumstances, whether it is appropriate to make a remedial order. If so, then the defect is cured on the court making the order. If the court cannot make a remedial order or does not consider that it is appropriate to do so, then the defect remains uncured.”

Having considered the authorities, it was found that the erroneous heading was a procedural defect, it was therefore ordered that it did not have the effect of invalidating the appointment.

It was said that in so ordering, the Judge was satisfied that the error related to procedure and not connected with the defined circumstances where the power to appoint arises. Further, that the substance of the form is correct and so no-one could be mis-led by the incorrect heading.

It was said by HHJ Michael Berkley held: “The purpose behind the heading provisions is, I find, for the plain and obvious reason to enable a reader to identify the relevant document: in this case the notice of appointment, no matter who made it. In my judgment it is plain that it cannot have been intended that a breach of that specific provision would render an appointment a nullity.”

Finally, in relation to the further two errors, the Judge was satisfied that, despite the reasoning behind those errors, they were procedural defects and, as with the above defect, did not concern circumstances in which the power to appoint arose. As such, they were defects which could be cured pursuant to Insolvency Rule 12.64.

The Judge, therefore, granted the application.

This case is an example of where defects, or errors, pursuant to legislation, can be cured, so long as they are not fundamental, nor any substantial injustice is caused as a result of those defects or errors.

Jonathan Bott recently advised and successfully represented the local authority in the High Court sitting at the Royal Courts of Justice on an application for injunctive relief against a father post final public law orders.

Following the making of final care orders, the father had attempted to contact and harass the child at school and in the foster carer’s care, which had put the child at risk of emotional and physical harm and had also led to the unfortunate breakdown of the child’s long term foster placement.

The issue related to the need for the kind of injunctive protection available under a Family Law Act 1996 (‘FLA’) injunction with a Power of Arrest (which was unavailable under the inherent jurisdiction of the High Court), but the difficulty being that the local authority was not a connected person under the FLA and therefore could not make an application of right, and there appeared to be no other person who could make such an application.

The solution was to make an application under the inherent jurisdiction of the High Court and thereafter, and within those proceedings, invite the court to make an FLA non- molestation order under s42(2)(b) of that Act under its own motion.

Following the hearing of submissions, the Court granted an injunction under the inherent jurisdiction coupled with a non-molestation order under the Family Law Act 1996 with a Power of Arrest attached protecting the child not only from further harassing and pestering behaviour, but preventing the father from attending at the school, any foster carers and removing the child from the care of the local authority.

Article by Katie Wilkinson

Acceptance of ‘PPI Complaint Redress’ can give rise to a valid compromise

Consumer practitioners will be familiar with the mass litigation that has ensued in recent years regarding claims of ‘Unfair Relationship’ following the Supreme Court Judgment in Plevin v Paragon Personal Finance Limited [2014] UKSC 61.

The basic crux of the claims centred on undisclosed commissions that were being retained by Banks from premiums being paid pursuant to the sale of Payment Protect Insurance (‘PPI’).  A declaration of unfairness together with a claim for compensation pursuant to s.140A/B Consumer Credit Act 1974 was routinely sought.

One of the common points of Defence taken by the Banks was that the Claimant had accepted a compromise of their claim following a pre-action complaint having been made, and a payment of money accepted under the Financial Conduct Authority redress scheme.

Following a hearing held between 15 – 17 May 2024 Judgment was handed down by the Court of Appeal on 26 September 2024 in the matter of Self v Santander Cards UK Limited and Harrop v Skipton Building Society [2024] EWCA Civ 1106.

In the case of both Mrs Self and Mr Harrop (the ‘Claimants’) unfair relationship claims were brought, and the claims were defended by Skipton and Santander on the basis that the claims had already been compromised.

As is common in PPI cases that reach the Courts, the Claimants had accepted pre-litigation redress payments made in full and final settlement following complaints having been made.  Skipton and Santander both successfully defended the claims at first instance, and also on appeal.

The Court of Appeal granted permission to appeal to the Claimants and both appeals were heard together.

As has been the case in hundreds of claims at first instance, the Claimants disputed that there could have been a valid compromise on the basis that:

1. There was a lack of consideration to form a valid compromise given that offers of redress were in line with the FCA complaint process which obligated finance companies to make such offers
2. The ‘settlement’ was in relation to the pre-litigation complaint and did not preclude a claim being issued under the unfair relationship provisions
3. The ‘settlements’ were itself open to be considered under the unfair relationship provisions, and they were unfair to the Appellants

Those 3 issues were under appeal, and the Court of Appeal dismissed both appeals on a unanimous basis.

Giving the lead Judgment, Lord Justice Stuart-Smith recognised that the effect of the FCA’s Dispute Resolution Complaints sourcebook (“DISP”) App 3 imposed a mandatory obligation to ‘investigate and assess the complaint and offer redress or remedial action if and when it decides that is appropriate (paragraph 71).   It was rejected by the Court of Appeal that the Respondents were obligated to make an offer of redress to complainants.

At paragraph 75, it was said ‘it is obvious that, on the respondent making an offer of redress, the complainant and respondent will be in the territory of (negotiated) consensual settlements’.

Unsurprisingly, the Court of Appeal held that whether the offer of redress and its acceptance gives rise to a legally binding agreement depends on the terms used by the parties, whether they intend to create legal relations and whether the offeror gives good consideration for the agreement (paragraph 81).  In the cases of Santander and Skipton, given that they were not obliged to make offers of redress to Mr Harrop and Mrs Self, there was valid consideration in doing so.  The Appellants’ reliance on Arrale v Costain Civil Engineering Ltd I[1976] 1 Lloyd’s LR 98, a case frequently relied upon by Claimants appearing in the County Court, was firmly rejected.

In respect of the argument that the settlement only compromised the complaint rather than any right to pursue a civil claim, Stuart-Smith LJ considered the position to be both unarguable and misconceived.  It was held that both the redress letter and customer acceptance form which was signed by Mrs Self clearly set out that a claim for undisclosed commission was being settled.  The claim that was brought before the Court mirrored the complaint that was made pre-litigation.

Whilst properly acknowledging that the Court retains jurisdiction to consider unfairness arising from a compromise of a CCA 1974 claim, the Court of Appeal adopted and endorsed what was said by Nugee J in Holyoake v Candy [2017] EWCA Civ 92, that the fact that a compromise had been reached was ‘highly relevant’ when considering what order, if any to make under s.140B.  In line with Holyoake, it was held that a Court should be very slow to go behind a compromise reached in such circumstances where the terms of the offer were clear and unambiguous, with the offeree retaining the right to either accept or reject it.  Skipton and Santander were held to have discharged the burden of showing the relationship was fair.

Whilst the number of cases involving PPI complaints has significantly decreased, the decision of the Court of Appeal has helpfully clarified the availability of ‘compromise’ defences to Finance Companies who may still be dealing with both ongoing and new claims.

Article by Harry Owen

On 24 September 2024 the Financial Conduct Authority announced a revised timetable for announcing its much anticipated findings following the investigation into discretionary commission arrangements (DCAs) in respect of car finance loans.

The FCA are now planning to announce the findings of their investigation and next steps in May 2025, stating that this will allow the time needed to assess whether firms should be allowed to handle complaints in the usual way or whether to introduce a different approach.

While investigating, the FCA also extended the deadline that providers (lenders or brokers) must provide a final response to customer car finance complaints to after 4 December 2025.

On 11 January 2024, the FCA announced a review into whether motor finance customers have been overcharged because of the past use of DCAs. At that time the FCA paused the 8-week deadline for a final response to complaints, in an effort to avoid disorderly, inconsistent and inefficient outcomes for consumers, as well as knock-on effects on firms and the market, while the issue was investigated and a way forward determined.

On 30 July 2024, the FCA consulted on a proposal to extend the DCA complaint handling pause, due to delays in obtaining the relevant data required.

The FCA is also awaiting the outcome of a judicial review launched by Barclays Partner Finance, which will consider the Financial Ombudsman Service’s decision to uphold a complaint relating to its use of a DCA. It is considered that the judicial review will consider legal issues highly relevant to the FCAs investigation. The hearing is due to take place in October 2024.

It is now anticipated that the FCA will set out the next steps in their review into the past use of DCAs in May 2025. By then, the FCA expect to have completed their analysis and assessed the outcome of the Barclays Partner Finance judicial review and other relevant cases in the Court of Appeal.

The indication from the FCA is that the once the extended pause finally comes to an end, it looks increasingly likely that a consumer redress scheme will be introduced as an alternative way of dealing with DCA complaints.

It has been confirmed by the FCA that consumers have until the later of 29 July 2026 or 15 months from the date of their final response letter from the firm, to refer a DCA complaint to the Financial Ombudsman (instead of the usual 6 months). This will prevent consumers from having to decide whether to refer their complaint to the Financial Ombudsman before any proposals for alternate resolutions are announced.

It has been reported that in excess of 500,000 motor finance complaints have been raised and as such there has been much anticipation as to how matters will move forward, but it appears for the time being at least, that the wait will continue.

Halcyon Chambers is inviting applications to join our Civil, Family and Immigration teams. It is an exciting opportunity to join a growing team of diverse and specialist barristers.

More details can be found on our Tenancy page.

All applications and queries should be directed to Senior Clerk, Chris Ridley. All correspondence will be dealt with in the strictest confidence.

Article by Katie Wilkinson

In May 2024 the High Court handed down Judgment in The Tropical Zoo Limited v The Mayor and Burgesses of the London Borough of Hounslow [2024] EWHC 1240 (Ch) following a five day trial before Mrs Justice Bacon.

The trial considered three primary issues:

1. Whether breach of a ‘Jervis v Harris’ clause triggered a right of re-entry and forfeiture;
2. Whether there had been a waiver of forfeiture by the Defendant;
3. Whether the Claimant required, or was able to obtain relief from forfeiture.

The Facts

The case involved a parcel of land covering an approximate area of 25 acres located close to Heathrow Airport.  The Claimant is an operator of Zoos and the Defendant was the Local Authority.

The Defendant had granted a 125-year Lease to the Claimant in 2012.  The Lease was in relatively standard form in containing covenants for which the tenant was to perform, and a right of re-entry for the landlord.

The Lease also contained a ‘Jervis v. Harris’ clause.  Such a clause grants the landlord a right to serve notice on a tenant specifying breaches of covenants relating to the condition of the property.  If the tenant then fails to remedy the breaches identified in the notice within a specified period (as set out in the Jervis v. Harris clause), the clause grants a right for the landlord to enter the property to carry out the works themselves and to then recover the costs of doing so from the tenant as a debt.

It was a term of the Lease that the Claimant would construct a Zoo on a part of the land within 2 years.  Planning permission for the construction of the Zoo had been granted.

In 2020, being some 8 years since the grant of the Lease, the Claimant had failed to build the Zoo.  As a result, the Defendant served two notices under s.146 of the Law of Property Act 1925 requiring the tenant to remedy its breach of the Lease.

The Claimant brought a claim seeking declarations that the Lease was not liable to be forfeit because inter alia the Defendant was said to have waived any right of forfeiture by its acceptance of ongoing rent payments.  In the alternative, the Claimant sought relief from forfeiture. 

The Jervis v Harris Clause

There was no dispute that the Claimant was in breach of the obligation to construct a Zoo within two years of the grant of the Lease and that rent was subsequently accepted by the Defendant thereby waiving the breach (being the period between circa 2014 and service of the notices).  However, the Court accepted the Defendant’s argument that the failure to comply with the s.146 notice requiring the Claimant to remedy the breach was freestanding.  It was held that the defendant had been entitled to serve the s.146 notice and take steps to forfeit the Lease even though the breach had occurred many years earlier.

Waiver of Forfeiture

The law applicable to the doctrine of waiver is complex and the Judgment helpfully included a summary of the status of the law.

The Defendant relied upon the express wording of the re-entry clause which was to the effect that the landlord retained the right to re-enter the premises even if it had waived any previous right of re-entry.

It was argued by the Claimant that the clause was inconsistent with the doctrine of ‘waiver’ at common law and thus had no effect.  The effect of the clause was also in issue as a matter of construction.

The Court held that the clause did not oust the common law doctrine of waiver as a matter of construction and, on consideration of the facts, the Defendant was not found to have acted inconsistently with forfeiture even though the return of rental payments made by the Claimant were delayed in some instances.

Relief From Forfeiture

As a result of the Court’s findings, the Claimant required relief from forfeiture.  The application was made on the basis that a Zoo would be constructed in remedy of the breach.  In principle, the Defendant did not oppose the Claimant’s position, but the Defendant doubted that the Claimant had sufficient funds to construct the Zoo.  The granting of relief from forfeiture is discretionary for the Court.

The Court confirmed that it should consider whether there was a real likelihood that the conditions required to remedy the breach would be met.  The Court was not satisfied that the Claimant had any real prospects of erecting the Zoo and thus remedying the breach, and for those reasons the Court refused the application for relief from forfeiture.

The Claimant was granted permission to appeal to the Court of Appeal.

Article by Trevor Berriman

Claimants seeking an injunction to prevent acts of nuisance or harassment under the Protection From Harassment Act 1997 often make a claim for damages to compensate for the distress that has been caused.

Damages claims for harassment, alarm and distress are usually pleaded at a relatively low value; claimants are primarily seeking the protection to be gained from achieving a final injunction and the damages claim is simply included as a matter of course.

Reported court awards of damages for general inconvenience and distress also tend to be modest.

It is possible, however, to make a claim for diminution in the value of property in cases where neighbours have committed acts of nuisance and harassment.

The case of Raymond v Young [2015] EWCA Civ 456 involved just this point.

In Raymond v Young it was held by the Court of Appeal that the Judge in the Court below had been entitled to make an award for diminution in value of the claimants’ property caused by nuisance, despite the grant of a permanent injunction restraining the defendants from further acts of nuisance. At first instance, however, the Court had made an additional award of damages for distress and loss of amenity.  The Court of Appeal held that the lower Court was wrong to have done so as it amounted to double recovery.

Narrative

The appellants appealed against a decision awarding damages in favour of the respondents for diminution in the value of their property.

The appellants owned a cottage, and the respondents owned an adjacent farmhouse. The farmhouse had originally been owned by the father of the first appellant, but it had been sold on the father’s retirement. It was eventually purchased by the respondents as a holiday home.

At trial, the Court made a finding of fact that the appellants had been responsible for continuous acts of harassment, trespass and nuisance against the respondents over a period of many years. Those acts included obstructing the respondents’ driveway, vandalising their property, burning noxious materials causing smoke, dumping rubbish, and physical intimidation.

The Court also made a finding of fact that the acts of harassment and nuisance were motivated by resentment at the respondents’ acquisition of the farm as a weekend home.

The Court granted a permanent injunction to prevent further nuisance and made a financial composite award of £20,000 for distress and loss of amenity.  

The Court further found that the appellants’ actions had caused a diminution in the value of the farm of 20 per cent, amounting to £155,000 and a further award in that sum was made.

On appeal, it was considered relevant whether the nuisance was transitory or time limited.  If so, the measure of damages should reflect the diminution in the value of the right to live in the property during the relevant period only.

In Raymond v Young however, the recorder had found that the appellants’ conduct could not be described as transitory, and that it was likely to continue to be a facet of the First Appellant’s character and behaviour, so far as not restrained by the injunction. Therefore, the grant of a permanent injunction was not likely to be treated by a potential purchaser as a guarantee that they would not be subjected to the same treatment.

The benefit of the injunction was said to be personal to the respondents and, on any sale of the property, the protection that the injunction afforded would end. 

The Court of Appeal therefore held that the Judge below was entitled to make an award of £155,000 for diminution in value calculated on the basis that the threat of a nuisance to future purchasers would continue.

It was held to be wrong to have awarded damages of £20,000 for loss of amenity along with the full measure of capital loss of £155,000. That amounted to double recovery, as the sums were alternative methods of calculating the diminution in value of the respondents’ property. If damages were awarded for loss of capital value, then damages for loss of amenity were excluded and it was not appropriate to make separate awards of damages for distress in cases of nuisance.

Claimants should ensure that any claim for damages based on acts of nuisance or harassment are not duplicitous.  If a diminution in value claim is available to a claimant, it may result in a much higher award of damages than what may have been achieved solely in a damages for harassment claim.

Halcyon Chambers is delighted to announce that three new pupils have commenced their First Six Pupillage from 1 July 2024.

Simon Villau will be commencing a mixed Common Law Pupillage under the supervision of both Inderjit Thind and Katie Wilkinson.

Sonya Kalyan will be commencing an Immigration Law Pupillage under the supervision of Tony Muman.

Paige Procter-Harris will be commencing a Family Law Pupillage under the supervision of Suzanne Hodgkiss and Inderjit Thind.

All three will be able to accept instructions from 1 January 2025 and everyone at Halcyon Chambers wishes them the very best.

Barbara was recently instructed to represent a respondent mother in private children law proceedings where contact between the applicant father and the child had ceased following a disclosure made by the child that suggested she had been sexual harmed by the father. The father denied the allegation and made a cross-allegation that the mother was fabricating these disclosures to prevent him from having contact with the child and she had been obstructive to contact progressing since the conclusion of the first set of private law proceedings.

Upon hearing oral evidence and taking a holistic view of the evidence before the court, the Judge took the view that the child had made these disclosures and she had been honest with what she had said. The court found that on the balance of probabilities, the father had perpetrated sexual harm on the child. The court also said the mother had been actively the progression of contact until the child made this disclosure and her actions following this had been entirely appropriate and supported by the local authority. The court agreed that the mother had not acted maliciously by stopping contact, nor did she fabricate the disclosure made by the child as a means of alienating the child from the father.

To instruct Barbara Gonzalez-Jaspe please contact the Clerks.

The Festive period can be worrying and an expensive time of year for those families that struggle to make ends meet.

Birmingham City Mission was established in 1966 helping those in need throughout the City. Every December, Birmingham City Mission delivers presents for those families who see Christmas as a burden rather than a special and joyous occasion as it should be.

Halcyon Chambers are proud to have contributed to this fantastic cause and on Friday morning, our Senior Clerk Chris Ridley along with other Members of Halcyon Chambers delivered this year’s donations.

We would like to thank all our Staff and our Barristers who generously donated, making the festive season a memorable one for so many families across the City.

There is still time to donate to this fantastic cause and please see link here if you would like to read more about Birmingham City Mission and the work they do throughout the year.

Merry Christmas to all from everyone at Halcyon Chambers.

Members of Halcyon Chambers attended the 28th Annual Asian Legal Awards at the Royal Lancaster Hotel in London organised by the Society of Asian Lawyers.

It was great to catch up with so many of our colleagues from the legal world.

We thoroughly enjoyed the evening and congratulations to all the nominees and winners. We look forward to the next one.

Article by Harry Owen

On 15 November 2023 – after months of anticipation – the Supreme Court finally handed down its judgment in Canada Square Operations Ltd (Appellant) v Potter (Respondent) [2023] UKSC 41.

The judgment affirms the decision of the Court of Appeal on the issue of deliberate concealment; however the Supreme Court rejected the Court of Appeal’s finding that “deliberately” can also mean “recklessly” in the context of this case.

Background

The case involved a loan and an associated payment protection insurance policy (“PPI Policy”), taken out with Canada Square, by Mrs Potter in July 2006. Mrs Potter was not advised by Canada Square that they would be paid over 95% of the premium for the PPI Policy by way of commission.

In December 2018, Mrs Potter issued proceedings against Canada Square, seeking recovery of the sums paid by her, under the terms of the PPI Policy. In defending the claim, Canada Square argued that the claim was statute barred, as the limitation period of 6 years imposed by section 9 of the Limitation Act 1980, had expired.

Mrs Potter sought to rely on section 32 of the Limitation Act 1980, arguing that the six year limitation period did not begin to run until she had discovered the commission being paid to Canada Square. Mrs Potter had become aware of the commission in 2018.

The County Court decided that section 32 of the Limitation Act 1980 applied and ordered Canada Square to pay Mrs Potter £7,953.00. Canada Square appealed, unsuccessfully, to both the High Court and to the Court of Appeal. Canada Square finally appealed to the Supreme Court.

Issue

The Limitation Act 1980 sets out the limitation periods for bringing different kinds of legal claims.

Section 32(1)(b) postpones the commencement of the ordinary limitation period where any fact relevant to the Claimant’s right of action has been “deliberately concealed” from them by the Defendant.

Section 32(2) provides that, for the purposes of section 32(1), “deliberate commission of a breach of duty in circumstances in which it is unlikely to be discovered for some time amounts to deliberate concealment of the facts involved in that breach of duty.”

In deciding whether Mrs Potter’s claim was statute barred, the Supreme Court clarified the terms “deliberately concealed” in section 32(1)(b) and “deliberate commission of a breach of duty” in section 32(2).

Judgment

The Supreme Court dismissed the appeal, deciding that Mrs Potter’s claim was not statute barred, on the basis that section 32(1)(b) of the 1980 Act postponed the commencement of the six-year limitation period until Mrs Potter was advised that the premium was likely to have included substantial commission, which occurred in November 2018.

A Claimant relying on section 32(1)(b) to postpone the start of the limitation period imposed by the Limitation Act, must prove that a fact relevant to the Claimant’s right of action was deliberately concealed by the Defendant.  The Supreme Court clarified the meaning of the words “deliberately” and “concealed” in this context.  In relation to the meaning of “concealed”, the Supreme Court held that a fact will have been concealed if the Defendant has kept it secret from the Claimant, either by taking active steps to hide it or by failing to disclose it. The only requirement is that the Defendant deliberately ensures that the Claimant does not know about the fact in question and so cannot bring proceedings.

On the meaning of “deliberately”, the Supreme Court held that the Defendant’s concealment of a relevant fact will be deliberate only if the Defendant intended to conceal that fact.

Effect

It is not clear at present, how many cases will be affected by the Supreme Court’s decision in refusing the Defendant’s appeal in this case.  While there is clarification of “deliberate concealment”, it is notable that the Supreme Court did not consider the “reasonable diligence” limb of s.32(1)(b) as it did not form the subject of the creditor’s defence or appeal at any stage.

It appears likely that the upholding of the Court of Appeal’s decision and the clarification provided by the Supreme Court of “deliberate concealment” will do little to resolve the ongoing issues of limitation raised between parties in PPI commission claims which remain unaffected by the Supreme Court’s decision in Smith and another (Appellants) v. Royal Bank of Scotland plc (Respondent) [2023] EWCA Civ 1832. See article by Katie Wilkinson here.

Article by Katie Wilkinson

Commencing a claim for an injunction and damages under the Protection from Harassment Act 1997 can no doubt be a daunting prospect for individuals, particularly those who represent themselves as Litigants in Person.

Claimants usually seek an interim injunction to be put in place whilst the litigation proceeds to a conclusion.

Whether an interim injunction application is made ex parte, meaning without notice to the Defendant, or on notice to the Defendant, the Court will usually list a hearing within the space of a few days/weeks to consider whether an interim injunction should be granted and/or whether a previously granted interim injunction should continue.

It is common for the issue of undertakings to arise at the first hearing where a Defendant attends.  Solicitors and Barristers are familiar with the offer and acceptance of undertakings, but Litigants In Person may not be so familiar.

An undertaking is effectively a promise made to the Court to be bound by certain requirements.  In cases involving harassment, a party may, for example, offer an undertaking not to approach or speak to the complainant.  Sometimes, an undertaking will be offered that is identical to the terms of the injunction sought.

A Court may decide to discharge an interim injunction and replace it with the offer of an undertaking from a Defendant.  In other circumstances, a Claimant may agree to the replacement of an interim injunction with an undertaking and may even agree to compromise the entirety of the proceedings by way of undertaking.

Undertakings are not usually given on the admission of liability, therefore a Defendant offering an undertaking may do so on the basis that they deny any wrongdoing but will agree to refrain from certain actions going forward.  The Court often views undertakings as ‘if I do not intend to harass X, where is the harm in not agreeing to harass X’.

Whilst a Claimant who feels victimised by harassment may find it difficult to accept an undertaking in circumstances where wrongdoing is denied, undertakings are often a sensible way to resolve disputes.

Litigation can be very expensive.  The Court process can be lengthy, and the final determination of the claim can take months to achieve.  A loss at trial to a Claimant who feels victimised may also be unpalatable.

An undertaking can act to de-escalate tensions and provide finality to parties who may struggle to pay for legal representation, or who may benefit from a swift end to the litigation.

A breach of an undertaking is actionable as a contempt of court and may result in a fine or imprisonment for the defaulting party.  Undertakings are therefore extremely important and serious in their effect.  Any party giving an undertaking will be made aware of the consequences of breach and may be required to sign the undertaking in the presence of a Judge.

Whilst an undertaking may not be the perfect solution for some Claimants, their value should not be underestimated, as undertakings are very often a sensible resolution to proceedings.

Article by Thomas Wheeler

A Creditor who is owed a sum of money from another who does not make payment in a timely fashion, will understandably be frustrated. After all, the Debtor is withholding sums which are rightfully yours and so you wish to recover that money as soon as possible.

The question to then pose is “how do I go about this?”

There are a number of ways of obtaining the sums owed, one of which is to go through the Court and obtain a judgment. This judgment can then be enforced by, again, a number of means. This can be lengthy and costly depending on the level of the sums owed and the time it takes to go through the Court process. However, at the end of those proceedings, you will have had a determination of whether you are owed those sums or not.

Another option is to issue a Statutory Demand on the Debtor. This is the pre-cursor to bankruptcy proceedings and can be a much shorter process than making a claim.

However, except where a Statutory Demand is based on a judgment from the Court, there must be careful consideration as to the appropriateness of pursuing this method of obtaining a debt owed. If such consideration is not properly undertaken, the implications could be considerably costly.

The bankruptcy legislation and the Insolvency Rules are designed to deal with the bankruptcy process summarily – the Court will generally not hear oral evidence or get involved with substantial disputes between the Creditor and the Debtor during this process.

And therein lies a problem for any Creditor who seeks to make someone bankrupt: “Are the sums owed to me likely to be disputed?”

Upon serving a Statutory Demand, a debtor has 18 days to apply to set it aside, or 21 days to pay the sums due before a Bankruptcy Petition can be presented to the Court. Should there be an application to set aside made by the Debtor, the Court will have to make a determination as to whether the Statutory Demand should be set aside.

Under Insolvency Rule 10.5(5), the Court may grant the application to set aside if:

“(a) the debtor appears to have a counterclaim, set-off or cross demand which equals or exceeds the amount of the debt specified in the statutory demand;

(b) the debt is disputed on grounds which appear to the court to be substantial;

(c) it appears that the creditor holds some security in relation to the debt claimed by the demand, and either rule 10.1(9) is not complied with in relation to it, or the court is satisfied that the value of the security equals or exceeds the full amount of the debt; or

(d) the court is satisfied, on other grounds, that the demand ought to be set aside.”

The most common argument is that the debt is disputed on grounds which are substantial. The Court will not hear evidence from the parties, but only see what is written down in witness evidence and documents. The Court will hear oral argument from the parties or their representatives.

In determining whether there is a substantial dispute, the Court will look at whether the defence raises a genuine triable issue (even if improbable) – see Markham v Karsten [2007] EWHC 1509 (Ch).

Despite the wording “substantial” indicating a high threshold for such a Defence, the Court merely needs to be satisfied there is an issue which can be tried, even if such an issue is unlikely to succeed.

Should the Debtor be successful in setting aside the Statutory Demand the Debtor would be entitled to their costs. These could be substantial if they have legal representation, and in some cases could be more than the debt being sought by the Creditor.

The Creditor would then be back at square one, still owed a debt, but will have to pay out costs to the Debtor.

It is for this reason that a Creditor who wishes to recover a debt of over £5000.00 should consider whether this debt could be disputed, for whatever reason. If there is likely to be a dispute, then bankruptcy proceedings may be inappropriate and a claim through the Court would be the better choice.