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The Curious Case of the "Solicitor" and the Liquidation Petition

24 August 2020 Written by Stephen Cowan Category: Blog

Uncontested liquidation petitions do not really “excite”. In fact, they follow a well-trodden path of a petition to the court, prior to which the debtor company’s insolvency will have been established usually following an expired statutory demand for payment or a charge for payment (the first stage of Scottish enforcement) following on from a court’s decree.

Not so, in the case of FF v AFMS Ltd. In Sheriff McCormick’s decision of 9 July 2020, the Sheriff took the unusual step of dismissing an undefended petition.The reason for this was that the petitioning creditor was represented by what the Sheriff had been told was a solicitor. However, the individual concerned did not have a practicing certificate. Because of this, the Sheriff decided that the petition was incompetent. Apparently a “Mr. M” both signed and served the statutory demand upon which the petition was based as a “solicitor” when, in fact, he was not.

In addition to the debtor company’s name being misspelt in the demand, upon enquiry by the court, “M” said that he had been a solicitor for some years previously and was now practicing as a “commercial attorney”. Upon further enquiry, “M”, conceded that he misunderstood what the terms of being a registered “commercial attorney” were. Despite this, he still thought that it was competent for him to sign the writ for the debtor company’s liquidation.

Needless to say, the Sheriff was not amused. And, even though the debtor company had failed to respond to the statutory demand “because there were issues with its competency”, all that followed from it was flawed and, as a result, incompetent. In the Sheriff’s opinion:

“This case raises public protection issues. I will not ignore that. The court and each party to a litigation is entitled to expect a representative lodging a writ is qualified to do so. After vacillating on his status, Mr. M claims that he is.”

The Sheriff continued to say that “M”’s status was important because, for example, if expenses were awarded against him personally, as agent for the petitioning creditor, and he was a solicitor, the protection which otherwise would have been available to the general public would be inaccessible.

Rehearsing some aspects why it was important that a party’s representative should be adequately regulated, the Sheriff said:

“Solicitors with practicing certificates spend time and expense in continuing professional development and, where events go awry, their regulatory professional body and insurers provide a route for the aggrieved. Standards are thereby maintained. The same may not be said about those trading in a misleading veneer of competence, status and public confidence, which the selective use of a professional title “solicitor” engenders all whilst choosing not to maintain a practicing certificate ( with accompanying regulation and public protection)”.

It will come as no surprise, then, that the Sheriff dismissed the petition as he held it to be incompetent.

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