Have you ever had a cheque bounced on you or a bank payment stopped?  If you have you will know how annoying and time wasting this is.

It is trite law that a cheque is equivalent to cash!

The leading case on bounced cheques and stopped bank payments is Esso Petroleum Co Ltd v Milton [1997].  In this case Esso delivered fuel to a petrol station and then the proprietor cancelled his direct debit mandate.  The court ruled that modern commercial practice is to treat a direct debit in the same way as a payment by cheque and, as such, the equivalent of cash; the effect of cancelling a direct debit was the same as countermanding payment by cheque.  The court therefore found in favour of Esso.

We were instructed by a client recently, as a matter of urgency, to serve a Statutory Demand. 

Such a document is served upon the debtor and allows them 21 days to make payment or a proposal.  If they do not take either of these steps (or apply to court within 18 days of service to have the Demand set aside on the grounds that the debt is disputed) a bankruptcy petition/winding-up petition may then be presented to the court. 

In this particular matter, the debtor company confirmed to our client that they had made a direct bank payment and had sent a lorry to pick up goods.  The goods were taken away and almost immediately the bank telephoned to say the payment had not been honoured.

We served a Statutory Demand by post and sent it by fax to the debtor company (unlike with individual debtors, personal service is not necessary where the debtor is a corporate entity).  Within three hours full payment had been received from the debtor.  
Statutory Demands are most effective when Judgment has been entered against a defendant or a cheque or bank payment has been stopped.  However, they are not appropriate if there is any dispute in relation to the debt.