When faced with a bank's formal demand for payment, individual debtors can feel that there is little they can do but comply. However, as a High Court ruling showed, with the right legal advice they are very far from powerless.

A bank served a man with a statutory demand requiring payment of £236,538. Such demands are frequently a precursor to bankruptcy proceedings. The man was said to owe the sum under loan facilities that had been entered into more than eight years previously. The demand was, however, set aside by a judge.

In ruling on the bank's challenge to that outcome, the Court rejected arguments that the demand had been issued outside a statutory time limit. There was also no basis for a finding that the bank had engaged in aggressive debt collection or that it had abused court process. On the man's own evidence, he had borrowed a substantial sum from the bank and had failed to pay it back when it fell due.

In dismissing the appeal, however, the Court noted that the demand simply specified a sum that was said to be owing, without any explanation as to how that figure had been arrived at. It gave no details of sums that the bank had previously recovered by way of enforcement of security, nor did it reveal how much of the total related to interest. As a result, the man was not in a position to fully understand the debt and his ability to defend the bank's claim was undermined.