Pre Action Protocols
by Neil Sorrell, November 7th, 2011
There are various essential points to remember before commencing any sort of legal proceedings. Although the overall outcome of the case may still be decided on the bare facts available, by ignoring the pre action protocols, then the costs that you have incurred in the proceedings may be lost.
Always show a real willing to settle a case without the need to use the Court. It is accepted that if a settlement cannot be reached, then at that stage legal proceedings can be issued, but giving the debtor an opportunity to pay after a stern warning must happen.
Set out the reason why the debt is due and owing. Don’t be afraid to set out your case as early as possible. In fact, the “cards of the table” approach to litigation is something that a Judge would want to see. It is not appropriate to go before a Judge and produce information that has not been previously served. I say, the sooner your case is presented to the other side, then the greater your chance of receiving all of your costs.
Show a willing to meet and discuss the potential disputes. Always consider, and show willing, for a round the table meeting if one is requested.
Remember that pre action protocols are often considered the most important aspect of litigation and should never be avoided.
Settle Settle Settle
by Neil Sorrell, September 16th, 2011
I want to sue someone out of principal even though I know they will probably pay?
Be very careful. The only people that benefit when the word “principle” is used are the lawyers. You should always be seen to be trying every possible avenue to avoid litigation rather than to just sue. Bear in mind that if you sue someone then you could be putting yourself in front a Judge and you would have to justify/substantiate everything that you have done. If you are not able to show that you did not try everything possible prior to the issue of legal proceedings, a Judge may not look kindly on your actions and penalise you in terms of the recovery of your legal costs. Bearing in mind that Judges are often lowering the costs awarded to the winning party from the total amount sought, you could simply be reducing your net gain of the successful litigation.
Also, understand that the Court Service is being squeezed and the funding being cut. The end result, as we are seeing now, is that the service being provided is not as it used to be. It is taking longer for each stage to happen, so you may actually find yourself in a situation whereby you are not able to seek payment as you are in Court limbo. An opportunist Defendant may know this and simply put your debt to the bottom of the pile.
So, be careful with a brash approach to the issue of legal proceedings, as I would say that your best option would be to attempt pre issue settlement pretty much all of the time.
By Neil Sorrell
Ask our Experts
by Neil Sorrell, August 3rd, 2011
How can I improve my chances of being paid?
Whether it is a business debt or personal arrangement, the first step is to make sure that you know who you are dealing with. Is the person you are negotiating with a sole trader or is he a director of a company? If he is a sole trader than gain the trading name and his home address. Ask for proof of residence. If you are dealing with a director, ask for proof of the correct company name and registered office address. All these questions are more likely to be answered during the negotiation period.
Confirm to the sole trader that he is personally liable for any credit given.
A free on-line search via Companies House will confirm the details provided by a director.
Make sure you are fully aware who you are contracting with.
Make it clear that you will chase the debtor the first day that payment is late and that you will take action to recover the debt if need be. Informing a debtor at that early stage will make it very clear that you mean to be taken seriously.
Such information presented at the beginning of a contract is more likely to be taken seriously.
By Neil Sorrell
Small Claims limit increase
by Neil Sorrell, May 20th, 2011
Please click on the link to an article with information about raising the small claims limit from £5,000 to £15,000.
Although raising the limit will not affect enforcement via the High Court Enforcement Officer, that lower limit of £600 will remain in place, what such a change will do is drastically reduce your potential to recover your legal fees.
As you are aware, the general rule regarding small claims costs is that the successful party is only able to recover the fixed costs, interest and a contribution towards travel costs and out of office costs. Not the fees that have been incurred by instructing a solicitor to act for you. I find this to be unfair. The end result for regular court users like yourself will be that the recovery of your legal fees will decrease which means that your net spend on legal services will increase.
I have always thought that if a company sues another company then the “no costs” rule should not come into force. Defendants are becoming increasingly aware of these basic court rules and some debtors, not all, will change their policy regarding payment in the knowledge that they have a lot of gain by not paying. We all know that cases have been discontinued, not because of the defence, but because of the cost to you of continuing. That is not fair.
With this proposal it will also result in many more summary judgment applications being made earlier in the case and certainly before the case has been allocated. Again, that will generate more fees for the court. I also think that more summary judgment applications will mean more hearings which will place a strain on the already fragile court service. The Court will say that there will be less hearings, but it is my opinion that there will be a net increase.
By Neil Sorrell
Enforcement – Not just the Bailiff
by Neil Sorrell, February 8th, 2011
It is wrong to assume that the main enforcement option to a claimant is to instruct someone to attend your address and levy on your assets.
Are you employed? If so, then the claimant could apply to the court for permission to extract money direct from your wage/salary. It would be your employer that would handle the payments. The court would decide the level of the regular payments.
Own a property? A charge could be placed over your property. It is even possible to then gain possession of your property, if the court allows, and for your property to be sold. The charge would need to be paid if the property was sold or remortgaged. If the amount of the final charge is greater than £5,000, then daily interest will accrue. If the charge remains unpaid for many years then the interest could greatly increase the amount owed. The charge would be registered at the Land Registry.
Do you have a bank account? The claimant could serve your bank with notice of its intention to freeze its contents and then allow the Court to decide if it should be released to it. Imagine having no available money in your account and having to wait until the court has decided whether to allow the claimant to have it? The problems that this could cause you should not be under estimated.
High Court Enforcement Officer. This individual has greater powers available to it than a County Court Bailiff and it also makes its living by legally adding its own costs on top of what the claimant is owed. It can gain forcible access to a commercial property. It also has quick access to removal vans etc so to avoid you moving assets. It can ascertain if you own a car and it will remove it if there is value in doing so.
Fancy attending court to be questioned about your finances? This will require you to attend court and disclose your entire financial situation. To not attend the hearing could lead to you being held in contempt of court and that could result in 7 days in prison. It is not possible to avoid disclosing your financial information as the court has the power to order you to supply it.
Don’t just think that the only option available to a claimant is to instruct a bailiff.
For more information contact a member of our Debt Recovery Team
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By Neil Sorrell
Judgments
by Neil Sorrell, February 4th, 2011
No, it is not a spelling mistake, I am talking about an order of the court.
Do not think that a judgment requires a hearing in order for a claimant to obtain it. It most certainly does not. A judgment can be obtained in default by filling in a form and sending it to court. The judgment would then be sent to the defendant and the claimant.
Imagine the following scenario. A debtor owes a creditor £4,500. It knows that it should pay but decides to pay it at a later date. The creditor seeks payments in writing. Still no payment sent. Proceedings are issued which incurs additional costs and interest. The creditor just happens to be on holiday for two weeks and does not see the claim form in time. The statutory period of time to reply to the claim form is 14 days after the deemed date of service. The creditor requests judgment in default and obtains a judgment which incurs even further costs and interest. If the full value of the judgment is not paid within one month, the judgment will remain against the debtor’s records for 6 years even if it is subsequently paid.
Now look how the additional costs have been added in relation to the above fictitious example.
Debt £4,500
Interest £200
Issue fee £108
Solicitors costs £80
Judgment costs £22
Additional interest £50
Total £4960
In this example, a further £460 has been incurred in costs. They must be paid or the judgment will not be satisfied.
If payment had been made in line with the agreed credit period, not only could the costs have been avoided, but the stress and worry of having a judgment registered as well.
Always remember that the judgment details are available to credit reference agencies and that information is available to lenders. That could easily remove you from being accepted for cheaper loans available on the high street. That may also mean that your only option in order to gain a loan is to accept an offer with greater interest repayments.
It is also possible to obtain a judgment via a hearing. Don’t think that a defence to a claim will remove the judgment option from the claimant. It will not. It could make a summary judgment application. If the claimant is successful at that hearing, it could result in additional costs, not just fixed costs. That could be very expensive to a defendant.
A judgment is to be avoided.
Follow me on Twitter. http://twitter.com/DebtRecoveryBoy
Debt Recovery – Speculate to Accumulate
by Neil Sorrell, December 21st, 2010
If you are owed money by an individual or a company, then the chances are you will attempt to recover the debt yourself. And why not, I mean after all you have provided the service as per the original agreement, so why not get paid in the normal way? It seems like a fair request to me.
When you write to your customer, you may like to say something like “Please provide me with payment of the outstanding invoices within 7 days or I will commence legal proceedings.” However, your headed paper can carry less weight than a solicitor’s. The same sentence incorporated into a letter from your solicitor, more often than not, focusses your customer’s mind into paying.
Some customers actually have a policy of not paying debts until they receive such a letter. If you wanted to instruct a debt recovery solicitor, then you should seek out a fixed fee for this “Letter Before Action”. Any decent Debt Recovery department will offer that. Ask the solicitor what you will get for that letter. I mean, if you went to a restaurant, the chances are you will know how much your dish will cost before you order it. So, the unfortunate fact of recovering your debt is that there will be times when you have to speculate to accumulate, but never agree to such services without knowing what it will cost you.
At Mayo Wynne Baxter, we have a full fixed fee schedule, and that information is available to browse on Fixed Fee Debt Recovery Services page.
Internal Credit Control
by Neil Sorrell, November 29th, 2010
Day one; get new client. Day two; got new client. Day three; perform work for new client. Day four; invoice new client. Day 100; Not been paid by new client….
Does the above sound familiar? Simply introducing a few strict measures into your own credit control procedures could reduce the number of days it takes your clients to pay your invoices.
Never be afraid to ask for payment. After all, you agreed in advance what you would do, what it would cost and when it should be paid. So why allow an extended period of credit at your own expense?
Try incorporating these simple steps into your procedure.
- First day after the invoice falls due for payment you make a polite call simply reminding your client that the invoice is due.
- 7 days after that, call again to ascertain if there is a problem with the bill.
- 7 days after that write to the client seeking payment of the bill and remind them of the terms of payment.
- 7 days after that you confirm that you will place the matter into the hands of your solicitor if the bill remains unpaid.
- 7 days after that, instruct a firm of solicitors with a Debt Recovery department that provides fixed fees. That way, you know what you will be paying before you provide instructions.
Always make sure you note the contents of each conversation, especially if the reply is “No dispute and we will pay”.
Try the above and see if it reduces the number of days your bills go unpaid and don’t forget to carry out your threats to escalate matters too.
For further information contact our Debt Recovery team or visit www.mayowynnebaxter.co.uk