Setting Aside A Statutory Demand – Watch The Clock!

In the recent judgement of ENG8 Limited v Biaco Limited and others, the Supreme Court of Gibraltar has issued guidance on the time limits and requirements that applicants should be aware of when applying to set aside a statutory demand. 

The Respondents, Biaco Limited, were represented in the matter by Darren Martinez, Partner at Hassans International Law Firm Limited.  

Receiving a Statutory Demand

When an individual or company receives a statutory demand, they have a small number of practical and legal options to preserve their position and avoid insolvency proceedings, including:

1. Paying the debt – this should be paid in full within 21 days from the date of service of the statutory demand.
2. Negotiating with the creditor – recipients may be able to agree a payment plan or compromise with the creditor.
3. Applying to set aside the statutory demand - this is an application for the court to intervene.

The Legal Framework for setting aside a Statutory Demand

Recipients wishing to dispute the statutory demand should apply to the Court to have it set aside. When doing so, it is important to be aware of the following legal provisions:

1. Time limit – an application to set aside a statutory demand must be made within 21 days from the deemed date of service of the statutory demand (Insolvency Act 2011, s. 142(2)).
2. Supporting documents – the application must be accompanied by an affidavit that (a) specifies the date of service; and (b) states the grounds for setting aside the statutory demand (Insolvency Rules 2014, r. 78).

It is important to note that the 21-day time limit for making the application cannot be extended.

The Dispute

ENG8 was the recipient of a statutory demand issued by Biaco Limited. The statutory demand was personally served at ENG8's registered office on 27 May 2025. In response, ENG8 filed a summons seeking to set aside the statutory demand on 17 June 2025. However, they did not file their supporting evidence until the following day, 18 June 2025, despite the requirement for all applications to be accompanied by supporting evidence. A dispute therefore arose as to whether ENG8 had filed their application within the 21-day window. 

Computing the Deadline

The 21-day deadline commences from the date of deemed service of the statutory demand. The ‘date of deemed service’ is the date the law treats a document as having been received for calculating legal deadlines, even if the recipient actually reads it on a different day. It fixes when time limits start to run for responses, applications, appeals, or other procedural steps. However, Gibraltar law does not specify a deemed date-of-service rule for personal delivery (this being the method of service in this matter).

In determining the correct deemed date-of-service, and in the absence of guidance from the Supreme Court Rules, the Court turned to two interpretive aids:

1. The General Clauses Act; and
2. The practice of the English High Court. 

The Interpretation and General Clauses Act, s. 54 governs the computation of time. In applying s. 54, the date of issue of the statutory demand is excluded. Therefore, even though the statutory demand was issued on 27 May 2025, it was not deemed to be served until 28 May 2025. In calculating 21 days from and including the 28 May 2025, the Court produced a deadline of 17 June 2025. 

In the second approach, the Court applied the English Civil Procedure Rules ("CPR") by virtue of s. 15 of the Supreme Court Act, which provides that Gibraltar practice should follow English High Court practice where legislative gaps exist. In applying the CPR rule on ‘clear days’ (CPR r. 2.8), which also excludes the day of issue and the day the period ends, this method also produced a deadline of 17 June 2025.

The Outcome

Both routes adopted by the Court yielded the same deadline of 17 June 2025. Therefore, all that remained was for the court to determine whether ENG8 had filed their application by 17 June 2025. Whilst ENG8 filed a summons on 17 June 2025 seeking to set the demand aside, it did not file the supporting affidavit (required under r. 78 of the Insolvency Rules 2014) until the following day, 18 June 2025. 

The Court held that the 17 June filing was incomplete because it lacked the mandatory supporting affidavit, and it therefore did not constitute an effective application under s.142 of the Insolvency Act 2011. The application was only properly made on 18 June 2025, after the statutory deadline had expired. Further, pursuant to s. 142(3) of the Insolvency Act 2011, the Court cannot extend time for the making of an application to set aside a statutory demand. ENG8 were therefore unsuccessful in their application.
 

Practical Implications

The Court's decision underscores that compliance with both the statutory 21‑day period and rule‑based evidential requirements is essential. An otherwise timely but procedurally incomplete filing will not be sufficient when applying to set aside a statutory demand.

If you wish to discuss any insolvency matters, please feel free to reach out to our Insolvency Litigation Team:

Daniel Feetham KC, Partner

Darren Martinez, Partner

Nikhil Nagrani, Associate