BVI Court Rejects "Improper Purpose" Argument In An Application To Set Aside A Statutory Demand

In the recent judgment of the ECSC in the matter of Sumner Group Mining Limited v Zica S.A (BVIHC (Com) 2020/0171, Walkers successfully represented the respondent in defending an application to set aside a statutory demand. Jack J provided helpful guidance on the legal principles in circumstances where it is alleged that a statutory demand had been served improperly for a collateral purpose.

The applicant sought to set aside a statutory demand on the basis of either:

1. there was a substantial dispute as to the debt owing (pursuant to section 157(1) of the Insolvency Act 2003); or
2. in the alternative, that substantial injustice would be caused "for some other reason" (pursuant to section 157(2)(b) of the Insolvency