Last week two former presidents of the UK Supreme Court, Lords Neuberger and Phillips, called for “a breathing space” for parties in legal disputes before filing a case in court. They were joined in their call by the British Institute of International and Comparative Law. Their argument is reasonable and persuasive. Lords Neuberger and Phillips are the most respected lawyers and judges that this country has produced. No one, they point out, could have foreseen the disruptive effects of C19.
Their Lordships are wrong and indeed, misconceived.
They are wrong because:
1. They are advocating a blanket approach. Some defendants will be able to pay. Some will not. This is true even absent Corona virus cash flow crises
2. Because their approach will encourage those who can pay, not to. In so doing, these voluntary non-payers will be able to point support to two of the most eminent legal minds in the country
3. Their approach, encouraging these voluntary non-payers, means parties owed money will have no choice but to issue proceedings
4. They take no account of allocation of risk. Their “holiday” will be advantageous to defendants and throws all the potential risk of loss on the claimant, who may, or may not, be able to meet the risk. Possession will no longer be 9/10ths of the law, it will be 10/10ths
5. They are wrong because secondary litigation is encouraged by their approach: claimants unable to obtain monies owed by defendants will themselves have bills and suppliers to pay
6. They are wrong because the law is the only forum we have in the last resort, in this society to sort out cases. If claimants are denied justice by the courts, and justice delayed is justice denied, then to whom do they turn?
More importantly than all of this is that their Lordship’s argument is predicated on a misconception. The misconception is the premise on which it is based. Their argument is premised on the basis that disputes go straight to court with neither check nor hindrance. This premise ignores the pre action procedures, practice directions and protocols that are part and parcel of the court procedures. These procedures operate to “triage” cases. They are what litigation solicitors “do”. Day in and day out, we look at claimants, defendants. We look at their means to pay. We look at the evidence. We look at the arguments. We write to the other side. We put our evidence and arguments and they write back and the issues, factual and legal are narrowed. It is as complex as any ballet. In other words, if their Lordships are arguing that cases ought not to go straight to court, they ignore that these checks exist and the court can sanction those who transgress.
The courts are open for business.
Remedies available to the Claimant
So, you are a claimant and you have provided services and the defendant is saying that they cannot pay because of a cash flow crisis.
First things first. Write to them setting out your claim. My advice is to write an email. The courts have no problem in accepting emails. Or you can write a letter and send via ordinary first class or signed for post. My advice is not to use “signed for”. An experienced dodger will know exactly what that means and refuse to sign. Do not, except in very rare cases, simply issue your claim before you write to the defendant telling them what you are claiming and why. If you do take action below without writing to the defendant first, the court will want to know why. The court may order that, even if you win, some or all of your costs are disallowed and even that you pay the costs of the losing party.
If you are owed £5,000 or more from a private individual (£750 for a company debt), you can serve a Statutory Demand. The threat here is that you intend, if the debt is not paid within 21 days, to make the person who owes you the money a bankrupt (or “liquidate” a company). They can apply to set this aside on good and substantial grounds. On a practical note, the court fees are expensive. Furthermore, do not use the Statutory Demand form to pressure anyone or for some ulterior motive and do not use it when there is a genuine dispute on the bill. On 6 April 2020, the Lord Chancellor made a temporary practice direction to deal with aspects of the Insolvency Act procedures that require “in person” attendance.
Money Claims online and the county court
There is also Money Claims online if the debt you are owed is less than £100,000 by no more than two people or two companies/ firms.
High Court claim
For more complex or larger cases, you are in the realms of the High Court. For this you need a case worth more than £100,000 and it needs to be complex in terms of fact or law. For cases of Personal Injury, the lower limit is £50,000.
If you are worried that assets may disappear the moment you write or make your claim, then the court may, on application, grant an order preventing the defendant from running off with the assets. You will need to have strong evidence and you will need to promise the court that, if in the end of the day the court decides against you in the main action, you will pay for any losses to the defendant arising from the order. For example: I supply $100,000 jet fuel to Nose Dive Airlines. They refuse to pay. I slap a freezing order keeping the aeroplane on the deck in the UK. The case comes to court and I lose. The aircraft could have made $800,000 in trips to and from the UAE. Under the terms of the order, I would have to pay those losses as well as and on top of the costs of Nose Dive.