Key point

A Court always has discretion whether to set aside a statutory demand based upon cross claims.

The facts

A debtor applied to Court to have a statutory demand set aside on the basis that he had a counter claim which, if set against the debt, would leave less than £750 outstanding. 

The decision

The Court refused to set aside the statutory demand.  The mere fact that the cross claim would, if proven, reduce the debt to below £750 was not enough where the debtor owed other debts which, when combined, would amount to over £750.

Comment

It appears that the Court will only set aside a statutory demand which is the subject of a cross-claim where, if the cross claim was allowed, the debt would be less than £750 and there is no suggestion of other debts that could be aggregated to exceed £750.  

It is not clear, however, whether those other debts must be demanded and overdue before a Court will be influenced by them, but this would be the sensible outcome.

Howell v Lerwick Commercial Mortgage Corporation Limited