#10464 - Unit 9 – Tactics In Commercial Disputes - Commercial Dispute Resolution
Unit 9 – Consolidation CDR
Disadvantages of litigation against a debtor:
Time consuming – debtor can stall entry of judgement (14 days from CF to file ack then they get 20 days from CF for defence – you then have to apply to strike out defence or summary judgement – could take weeks)
Costs unlikely to be recovered in full – costs for CF/interim app/sol costs ALL unlikely to be paid in full
Entering judgement does not guarantee payment – judgement can affect D credit rating but many D will still ignore
Judgements can be ignored
May need to take steps to enforce judgement – more time and costs
Litigation stayed if debtor becomes bankrupt/is wound up – client ranks as ‘unsecured creditor’
If D owns a property, judgement can be enforced by obtaining a charging order which would mean C is a secured creditor
PREP TASK:
Clause 7.1/2 has been breached
potential breach of clause 6 – not putting notice on invoice
Lancashire can check Pipers b/a – clause 19
What client is liable to pay under factoring agreement
- pay the money (160,000)to Piper with interest 5% over base
What step scan Lancashire Capital Plc take in relation to alleged debt
Commence a debt action – CF followed by summary judgement – Piper no reasonable chance of defending CPR 24.2
Enforce their security – COR 8 (fixed over business premises/floating over debtors/stock)
Petition for winding up
Terminate the contract (Clause 17.2.1.)
4. Further info needed from client
- Has the money been paid by Stockport to Piper
- Had Lancashire previously been offered the debt
- Did they stick notices on the invoices
- Financial situation of Piper (debts)
- What do Lancashire have security over
OUTCOME 1 – procedural and tactical steps possible and why takes them
| D can pay but is stalling for time | D can’t pay full amount | D doesn’t think they owe full amount and will resist paying | D is overdrawn but director of D co gave personal guarantee | |
|---|---|---|---|---|
| Advice to C | Corporate insolvency Undisputed amount of 750 or more, Piper will WANT to pay, they wont they bad publicity/potential of going insolvent if they owe other creditors/might make it difficult for them to trade/Insolvency procedure takes time and costs money | CF + Summary judgement No defence with real prospect of success, C gets a quick judgement, can take enforcement action and become a secured creditor Don’t want to do use corporate insolvency as will tell other creditors that D doesn’t have enough money to pay everyone | CF + interim payment Disputed debt but at least 750 undisputed, best option to try and get some money while D and C argue/go to trial over full amount due (no reason not to go for summary judgement at same time as procedure and time limits are the same) | Personal insolvency D must have some assets otherwise you wouldn’t have accepted the guarantee |
| Advice to D | Pay the debt now before a winding up petition is issued | Attempt to negotiate with creditor | Negotiate over the amount due | We can’t advise D personally as we represent company (O3.5 conflict of interest) tell the director to go and get independent advice |
OUTCOME 2 – grounds for interim apps
| Interim App | Strike out statement of case | CF +Summary Judgement | CF + Interim Payment | Security for costs (D only!) |
|---|---|---|---|---|
| When should it be used | When there isn’t any legal basis for the other party’s case | When the opposing parties case isn’t very strong | When you want to force D to make an early payment of damages | When D is worries that C will not be able to pay costs |
| Grounds | CPR 3.4 – strike out statement of case on grounds that: 1. it discloses no reasonable grounds for bringing/defending claim 2. it abuses courts process | CPR 24- Claim has no real prospect of success 24.2(a)(i) Defence has no real prospect 24.2(a)(ii) | CPR 25.7 - D admitted liability to pay damages; or - C has obtained judgement against D for damages to be assessed; or - C would obtain judgement of a substantial amount of money if went to trial | Court must be satisfied that it is just to make such an order, plus one of the CPR 25.13(2) grounds: 1. C is resident outside of the EU (company or individual) 2. C is a company and there is reason to believe that it will be unable to pay D costs if ordered to do so Must provide detailed breakdown of costs incurred to date and those likely to be incurred |
| Procedure 1. Try to resolve with other side first OO | CPR 24.2 - - (1)(a) D has to file ack of service or defence - 24.4(3) C must give 14 days notice of hearing +issue to be decided - 24.5(1) D can serve evidence at least 7 days before hearing - 24.5(2) C can serve response at least 3 days before hearing | - CPR 25.6(3) app notice and evidence served at least 14 days before hearing - CPR 25.6(4) D may serve written evidence in response at least 7 days before hearing - CPR 25.6(5) C respond by written evidence before hearing | C must provide - Bank guarantee - Pay money into court - Pay money into joint account held by parties sol | |
| Other | Adv - Early end to proceedings saves time and costs Risks: - Could may allow opposing part to amend it statement of case | Adv: - Enforce judgement over premises + turn into a secured creditor Risks to C: - Other creditor may start insolvency, litigation will then be stayed D may not have any assets Can it be obtained where claim for unspecified damages? Yes – judgement would be for damages to be assessed - Damages enquiry where court assess amount to be paid by D | Interim payments How much might D be ordered to pay? - CPR 25.7(4) - No more than a reasonable proportion of likely final judgement taking into account contributory negligence and any set off or counterclaim that would reduce the amount - Usually 60% of the lowest estimate of damages - trial judge will not find out about interim payments until issues of liability and quantum resolved r29.5 What if C awarded less than interim payment? - CPR 25.8 Court can award interest on the overpaid amount from the date he made the interim payment - CPR 25.8(1) Court has power to adjust interim payment If C loses: - He will be ordered to repay the interim payment r25.8(2) | |
OUTCOME 3 – procedure to make a company or individual insolvent
| Personal Insolvency | Corporate Insolvency | |
|---|---|---|
| Initiating | Statutory Demand s.267 IA 1968 R6 IR 1986 |
|
| When used? | s.268 - Undisputed debt of 750 or more/or judgement obtained which remains unsatisfied |
|
| Docs + Service? | Must do all that reasonable to bring stat demand to attention of D R6.3 – personal service Recorded delivery/personal service are best | Form 4.1 IR 4.8 served at registered office or director, officer, employee, someone authorised to accept service, leaving it so likely to come to the attention of someone attending there effect on debtor
|
| Effect | If unpaid for 3 weeks (starting day after service) then can petition for D bankruptcy | Have 21 days to pay (if don’t, deemed unable to pay s.123(1)(a) IA 1986 |
| Adv | Inexpensive, relatively quick – more likely to initiate response/payment Quicker than court proceedings IF D pays without having to petition for bankruptcy | Inexpensive process, threat of bankruptcy usually means likely to get paid |
| Risk to C | D cant pay and goes bankrupt – C becomes unsecured creditor and will get little or no money | If they rank as unsecured creditor may only get a proportion or money owed or nothing at all |
| Other | Winding up petition: Advertisement Creditor to advertise petition in London gazette 7 days after presentation + 7 days before hearing What can debtor do in response? Apply for injunction to prevent advertising or presenting petition (if dispute on reasonable grounds) What can creditors do? Support or take over winding up petition |
OUTCOME 4 – How debtor can respond the above procedures
| Petition | Can request to set aside within 18 days of service Use prescribed form plus affidavit
| No procedure to set aside demand as no demand BUT can apply injunction if petition would be an abuse of process |
|---|
OUTCOME 5 – Adv/Dis for a client adopting insolvency procedures against debtor
TASK 2:
1
a) Potential causes of action
- Tort of Negligence Misstatement – couldn’t use negligence as problems with pure economic loss
b) Evidence to be gathered
- Contract of services – s.13 SGSA “reasonable care and skill”
- Loss would be value of land without covenant – value with covenant
- Value of land evidence
- Speak to Council and Ian Dover
c) Steps to take prior to issuing proceedings
- C must follow pre-action protocol on professional negligence (send preliminary notice before the letter of claim)
2.
a) First step in commercial court in relation to CF
- Ack service of claim form within 14 days service of CF
b) Which interim app would you make on behalf of Jones Legal
- App to...
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