CreditFILE April 2011

Free Legal Review of your Credit Control Process

In these increasingly challenging times for all businesses, ensuring your credit control policies and procedures, and terms and conditions on trading are as effective as possible is a must, if you want to minimise the risk of unpaid bills and bad debts.

Brethertons is offering businesses a FREE review of your internal credit policy and supporting legal documents, to help your business avoid making costly mistakes. Obtaining specialist advice on how to protect your business could not be easier. We come to your office, look at your legal procedures at NO cost to you.

To arrange a free, no obligation Credit Review or to discuss our Commercial Recoveries Services, please contact:

Jackie Ray, Head of Commercial Recoveries
Tel: +44 (0)1295 661457
Email: jackieray@brethertons.co.uk

Brethertons Appointed Corporate Partners Of  The Institute of Credit Management (ICM) in respect of Legal Services
 

Brethertons is  have become one of the corporate partners of the Institute of Credit Management (ICM).  Our award winning and nationally recognised Corporate Recoveries team at Brethertons has worked with the ICM and their members for many years. The corporate partnership arrangement will see Brethertons advising and assisting ICM members from all over the world through a new legal email helpline.  ICM members can seek assistance with their commercial recoveries needs but also  across all Brethertons work areas. 
Brethertons were chosen to work alongside the ICM as they were identified as one of the top law firms to offer the best opportunities to the ICM members and the wider business community.
Jackie Ray, Head of Commercial Recoveries at Brethertons explains: “We are pleased to have been selected as legal corporate partner with the ICM. We believe the close relationship will be highly beneficial for both organisations, their members and employees.”

Brethertons Recognised as ‘Leaders in their Field’
 

Brethertons has enhanced its credentials as a leading law firm according to the independent legal ‘bible’ Chambers UK 2011.  Five senior experts were recognised as ‘Leaders in their Field’ by Chambers UK, the UK’s leading legal research directory.
The Chambers Guide, widely regarded as the most authoritative guide to the legal profession in the UK, is compiled after detailed research over a six month period including thousands of telephone and face-to-face meetings with clients and other law firms.  It ranks law firms and lawyers in 70 legal specialist areas. Rankings are based on technical legal ability, client service, commercial astuteness, diligence, commitment and the other qualities that are most valued by clients.
 

Prison Not Available to Enforce Tenant Debt Hearing

Threat of committal to prison for contempt of court should never be used simply to speed up a debt collection process, however long it has gone on. This was the ruling of the Court of Appeal in a case concerning Emeka Okonkwo, a tenant of Broomleigh Housing Association in Croydon, Surrey.

From 1999, the Housing Association made three separate claims for possession against Mr Okonkwo, all of them eventually withdrawn on terms that he must pay costs amounting to £441.68 in total. Orders to pay these amounts, dated up to 30 April 2004, were ignored and so the Association applied to Croydon County Court for an order for Mr Okonkwo to attend court to answer questions about his ability to pay.

In instances like this, a judgment creditor, such as the Housing Association, is entitled to obtain a court order for a debtor to attend court to be questioned about their means. In order to compel attendance, however, evidence must be supplied by the creditor to show that the order has been served. It is not unusual for the creditor to find it difficult to serve notice on the debtor.

In this case, the Association’s officers made repeated attempts to serve the court orders but were unable to do so, resulting in four separate scheduled court hearings being adjourned. At the fifth attempted hearing, on 22 November 2006, one of the Association’s officers gave evidence that he had served the papers, although this was later denied by Mr Okonkwo, who in any case did not appear at the hearing. As a result, the judge made an order in December committing Mr Okonkwo to prison for seven days, suspended provided he attended court on 13 March 2007. Further problems were encountered, resulting in a further three such orders being made. The fourth and final committal order was issued in February 2009, requiring Mr Okonkwo to attend court and answer questions on 5 May 2009. This he did, resulting in the committal orders being discharged. The appeal against the orders was allowed, however, because Mr Okonkwo was considering a career in law, and he felt that the committal orders could damage his prospects. There were also points of law that the Court of Appeal wished to consider.

At appeal, it was submitted that, before a judge can properly make a committal order, he must not only consider all the evidence but also allow the judgment debtor to be heard in his own defence. Failure to do so, it was said, would involve a breach of Article 6 of the European Convention on Human Rights.

Although a court has the power to make a committal order, to do so requires the exercise of discretion, which in turn requires consideration of the circumstances of the contempt. In the judgment of the Court, committing a person to prison for contempt of court is too serious a step to be undertaken simply as a matter of routine.

“However frustrating it may be for creditors in situations such as this, a threat of prison cannot be used simply to compel attendance at a court hearing,” says Brian Auld, Partner at Brethertons LLP.

IMPORTANT INFORMATION
 
INCREASES IN COURT FEES

 
The Ministry of Justice has announced increases in Court fees from 4th April 2011.
 
The fee for the issue of a writ of Fi Fa increases from £50.00 to £60.00
 
The renewal fee increases from £40.00 to £45.00 and the re-issue fee will increase to £60.00.
 
Costs of execution will increase from £101.75 to £111.75 to reflect the change (combining the court fee and fixed solicitors costs).
 
IN ADDITION FROM 1ST APRIL 2011 ALL CHEQUES IN RESPECT OF COURT FEES WILL NEED TO BE MADE PAYABLE TO HMCTS.
 
This reflects the change in name to Her Majesty's Courts & Tribunal Service.
 
The Courts will not accept cheques in the wrong name or the wrong amounts if received by them on or after the dates specified.
 
To view all the changes to the fees see the link below:
 
www.legislation.gov.uk/uksi/2011/586/made/data.pdf
 
 

Communications Needed to Understand the ‘Factual Matrix’ Are Admissible

‘Without prejudice’ communications, made when negotiating legal disputes in order to aid agreement, are not normally admissible in court. The idea behind them is to allow the parties to explore possible areas of agreement and make suggestions and admissions which they would not be willing to admit to in court.

A recent case shows, however, that just heading a communication ‘without prejudice’ does not offer blanket protection from disclosure.

The Supreme Court ruled that facts communicated in without prejudice correspondence, which would be admissible but for the without prejudice rule, could be admitted in evidence in a subsequent dispute to which they were relevant, provided that their disclosure was appropriate in order to understand the circumstances surrounding the matter and served as an aid to the construction of the agreement reached.

Although it may seem that this makes it risky to rely on the precept that disclosures made without prejudice will remain undisclosed, the ruling made it quite clear that the disapplication of the rule would not be extended beyond evidence necessary to explain the ‘factual matrix’.

In Brief - HMRC Toughen Stance on Companies in Difficulty

All the positive publicity generated about ‘time to pay’ agreements has increasingly been shown to be misplaced as new research shows that HM Revenue and Customs (HMRC) are now leading the way in bringing insolvency proceedings.

Recent research shows that in 2009/2010 more than 58 per cent of winding-up proceedings against companies were started by HMRC. Furthermore, HMRC’s rate of rejection for time to pay agreement applications has doubled in the last year.

OFT Cold-Calling Crackdown

The Office of Fair Trading (OFT) recently warned the debt management industry to cease from using unsolicited and misleading cold-calling practices to generate client leads.

As part of its crackdown on illegal cold-calling in the sector, the OFT has recently revoked the consumer credit licence of a company which used various improper practices, including e-mail ‘spamming’, misrepresenting itself as making calls on behalf of the Government and claiming to be able to obtain the writing-off of consumer debt for free.

The OFT is working with the debt management industry trade associations to warn members that they should only use licensed lead generation firms and that failure to do so could lead to licensing action. This will be reflected in revised guidance for companies working in the industry, which is due to be published for consultation next year.

OFT Consultation on Competition Compliance Guidance

 
The Office of Fair Trading (OFT) has published for consultation two guidance documents that aim to help businesses and company directors comply with competition law.

The first document, How Your Business Can Achieve Compliance, has been developed for businesses and their advisers. It sets out the OFT’s recommended risk-based, four-step process for creating a culture of compliance within a business. The guidance includes a separate quick guide intended to meet the specific needs of small- to medium-sized enterprises, as well as setting out in more detail the practical compliance measures businesses might be able to take.

The second document, Company Directors and Competition Law, explains the level of understanding of competition law that company directors are expected to have and outlines the steps they should be taking to identify and prevent breaches of the law. This will be particularly useful for those who are responsible for the provision of competition law training to board members.

The draft guidance for company directors follows the recent publication of the OFT’s revised guidance on Director Disqualification Orders in competition law cases, which sets out how it intends to use the sanction to deter anti-competitive activity.

Final versions of the guidance due to be published in spring 2011.

If you have concerns about any aspect of competition law, contact:
 
Brian Auld, Partner
Tel: +44 (0)1295 661436
Email: brianauld@brethertons.co.uk

Future webinar dates and booking form links