The debtor’s summons is the personal-insolvency equivalent of the company statutory demand — but it is granted by a Judge, not simply served by the creditor.
Section 23(1) — obtaining a summons
A debtor’s summons may be granted by a Judge on a creditor proving to his satisfaction that —
(a) a debt sufficient to support a petition in insolvency is due to the creditor from the person against whom the summons is sought; and
(b) the creditor has failed to obtain payment of his debt after using reasonable efforts to do so.
Paragraph (a) points to section 25, which sets out what debt is sufficient to support a creditor’s petition. Paragraph (b) requires reasonable efforts to obtain payment first — letters of demand, and usually proceedings or at least a settled refusal to pay.
The important structural difference from the corporate statutory demand is that a debtor’s summons must be granted by a Judge. A creditor cannot simply post a form. That is a real protection for individual debtors, and it means the merits get a first look before the summons issues.
Section 23(2) — the form of the summons
(a) be in the prescribed form, resembling as nearly as circumstances admit a writ issued by the Court;
(b) state that if the debtor fails (i) to pay the sum specified, or (ii) to compound for that sum to the satisfaction of the creditor, a petition may be presented against him that he be adjudged an insolvent;
(c) have an endorsement indicating to the debtor (i) the nature of the document served on him and (ii) the consequences of inattention to its requisitions.
Paragraphs (b) and (c) require the summons to spell out, on its face, both what the debtor must do and what happens if they do nothing. A summons that omits the statement or the endorsement does not comply with section 23(2).
That matters because of the consequence. Under section 21(1)(h), where a creditor has served a debtor’s summons in the prescribed manner requiring payment of a sum due of not less than K100.00, and the debtor has for the time specified in the summons neglected to pay the sum, or to secure it or compound for it to the satisfaction of the creditor, the debtor has committed an act of insolvency.
Note the three ways to answer a summons: pay, secure, or compound — the last two “to the satisfaction of the creditor”, which is an objective standard on which the Court can rule.
Section 24 — applying to dismiss the summons
A debtor served with a debtor’s summons may apply to a Judge, in the prescribed manner and within the prescribed time, to dismiss the summons on the ground that —
(a) he is not indebted to the creditor serving the summons; or
(b) he is not indebted in an amount that justifies the creditor in presenting an insolvency petition against him.
(a) dismiss the summons, with or without costs, if satisfied with the debtor’s allegations; or
(b) on the giving of such security as seems just for payment of the alleged debt and the costs of establishing it, stay all proceedings on the summons for such time as is required for the trial of the question relating to the debt.
That trial is to be before the Court or a Judge, or some other court that has jurisdiction to determine questions relating to debts of the same amount.
Paragraph (a) is outright dismissal — the debtor satisfies the Judge that there is no debt, or none large enough. Paragraph (b) is a stay on terms: the debtor puts up security and the underlying dispute goes off to be tried, wherever it properly belongs.
Paragraph (b) is the practical answer to a genuinely disputed debt. It parallels the section 338(4)(a) ground in the Companies Act — a substantial dispute about whether the debt is owing — but here the debtor is required to secure the claim rather than simply defeat the demand.
Note the two time limits in section 24(1): the application must be made in the prescribed manner and within the prescribed time, both fixed by the Act or the Rules of the National Court applicable to insolvency.
Debtor’s summons and statutory demand compared
| Debtor’s summons — ss 23, 24 | Statutory demand — Companies Act ss 337–339 | |
|---|---|---|
| Who issues it | A Judge, on proof by the creditor | The creditor, in the prescribed form |
| Precondition | A sufficient debt and failure to obtain payment after reasonable efforts | A due debt of at least the prescribed amount |
| Minimum sum for the consequence | K100 — s 21(1)(h) | The prescribed amount |
| Time to comply | As specified in the summons | One month from service |
| How to answer it | Pay, secure, or compound to the creditor’s satisfaction | Pay, enter a compromise, compound, or give a charge |
| Challenge | Apply to dismiss — or obtain a stay on security pending trial of the debt | Apply to set aside within one month, no extensions |
| Consequence of inaction | An act of insolvency, usable for six months | A presumption of inability to pay debts, usable for one month after the compliance date |
For a creditor, the summons has one clear advantage over other acts of insolvency: it can be created. Where the debtor has committed no act of insolvency, or the only one is more than six months old, serving a summons and waiting for the specified time produces a fresh one.
Sources
- Insolvency Act (Chapter 253) — ss 21, 22, 23, 24, 25
- Companies Act 1997 — ss 337–339
Before relying on anything here, read the current text of the Companies Act 1997 and check for later amendments. If a decision matters to you, get advice — start with the Office of the Public Solicitor, or find a firm in the law firms directory.