Irwin Mitchell Reports 200% Increase In Statutory Demand Cases

National law firm, Irwin Mitchell, has warned that the improvement in the UK economy is now leading to a significant increase in construction firms aggressively chasing debts through litigation in order to improve cash flow and take advantage of new growth opportunities.

Lawyers at Irwin Mitchell claim that in the last 12 months they have witnessed at least a 200% increase in the number statutory demands or threats to issue winding up petitions to liquidate amongst companies in the construction sector.

The warning from Irwin Mitchell follows a case in which it successfully defended a construction business against a contractor which had issued a statutory demand in relation to an interim certificate for payment of works undertaken under a JCT standard form of contract.

Irwin Mitchell’s client refused to pay the interim certificate because, amongst other things, the works had been delayed some months, giving rise to a cross claim for liquidated damages which far extinguished the amount allegedly owed under the statutory demand.

Initially the court rejected Irwin Mitchell’s client’s arguments because there was no clear completion date in the contract particulars from which liquidated and ascertained damages (LADs) could be calculated. This was despite documentary evidence which demonstrated the parties may have agreed a date for completion.

The matter was put before al judge who in at first instance had erred in his application of the test to set aside a statutory demand. On that basis, the appeal was upheld, and the statutory demand set aside with Irwin Mitchell’s client being awarded costs.

Steven Bate, Commercial Litigation Partner and specialist in the construction sector, said:

Irwin Mitchell’s construction, engineering and infrastructure team has grown significantly in the last two years. The 15-strong UK-wide team consists of Partners Steven Bate, David Parton and Julie Morrissy, and incorporates a specialist disputes team which advises employers, contractors and professional consultants on any disputes which arise out of construction projects. These include claims for extensions of time or variations, claims by contractors for loss and expense arising out of delayed or disrupted work, and claims by employers for defective works or liquidated damages for late completion of works.