A recent decision of the High Court suggests that a creditor who has not objected to a notice given under section 292 of the Companies Act may be able to defend the claim at a later stage.

In Grant v Lotus Gardens Limited, the creditor failed to serve a notice of objection to an application for orders setting aside payment under section 292 of the Companies Act.  Subsequently, and without obtaining any court order under section 295 of the Act, the liquidators issued a statutory demand requiring payment.  The creditor disputed the validity of the statutory demand.

The Court found that the creditor was still able to raise a defence against the liquidator.  After the time for the creditor to give a notice of objection has passed, the liquidators ought to have applied to the Court for orders under section 295, which are required before the creditor could become indebted.  Accordingly, the Court found that it was improper for the liquidator to have issued the statutory demand and the liquidation application was dismissed.  The liquidators were ordered personally to pay Lotus Gardens' costs.

See court decision here.