What To Do When A Debtor Company Disputes Receipt Of A Summons
In recent months, we have seen an increase in debtors attempting to frustrate enforcement by claiming non-receipt of summonses – but what does this mean in practice?
The legal position regarding service
Most pertinent is Regulation 13 (2) of The Non-Domestic Rating (Collection and Enforcement) (Local Lists) Regulations 1989, which provides that a summons may be served by sending it to a company’s registered office, by sending it to a place of business (where all or part of the sum payable relates to that place of business) or by sending it to an address given as a place at which service of the summons will be accepted. The latter option leaves some scope for doubt, as if a debtor company has consented to receive a different form of documentation at an address, it is arguable that this may not necessarily generalise to consenting to receive summonses, particularly as these have legal consequences. The wording of the Regulation also implies that the options are non-exhaustive, but our recommendation would be to use the registered office in the interests of certainty.
The validity of the liability order
Where a service address has been used which does not fit into the above categories, it does not follow that the resulting liability order is simply invalid. Where a debtor company is seeking to set aside a liability order, the Brighton and Hove test applies, and therefore: (1) there must be a genuine and arguable dispute as to liability, (2) the order must have been made as a result of a substantial procedural error, defect or mishap, and (3) the application must be made promptly after a defendant learns the order has been made, or has notice that an order may have been made. Service of a summons can clearly pertain to limbs two and three, but the Brighton and Hove test requires something more, and in particular evidence to question the debtor company’s underlying liability. Otherwise, it would be highly inequitable for a debtor company to escape its liability on a technicality.
We would also note that limb three relates to when the debtor company becomes aware of the existence of the liability order. Even where it is questionable as to whether a summons was received, there may be other useful background facts, such as past attendance by enforcement agents during which the orders were discussed.
We would caution against attempting to ‘quash’ a liability order in order to reissue the appropriate summons to an alternative address, as the quashing procedure in respect of business rates is largely unworkable in practice, and this raises potential issues concerning the repetition of past proceedings.
The recommended route
There is no requirement to prove that a summons was actually received by a debtor, and the focus is instead upon establishing that a summons was properly served. Service to a registered office is therefore the most prudent route, particularly with Companies House records providing an efficient and inexpensive way to satisfy a court of a debtor company’s registered office at the relevant time.
It would therefore be our recommendation that a copy summons is sent to a company’s registered office in each instance, in order to best minimise any potential issues, with additional copies to alternative addresses as appropriate. Given that registered office records are immediately available online at no cost, we would also recommend periodic checks at the point of issue in order to ensure that details remain accurate.